Why Opec's output cuts haven't got oil bulls excited yet

Why Opec's output cuts haven't got oil bulls excited yet

"Friday's agreement was a seemingly good one, or maybe we should say the best one under the current circumstances", Tamas Varga, a strategist with PVM Oil Associates, said.

From January to September, Azerbaijan exported close to 22 million tons of crude oil worth around $11.6 million, according to the State Statistics Committee, comprising 81 percent of national exports during the same period. Non-OPEC countries have agreed to reduce oil production by 400,000 barrels a day. "Production's exceeding of the consumption in the market and predictions about the decline in the world economy for the next year determined the fall in oil prices".

According to the OPEC's latest report, 15 countries represented in the organization produced approximately 33 million barrels of black gold (about a third of crude oil production worldwide) in October.

Daily oil production stood at 801,000 barrels in November 2018, of which 733,000 barrels accounted for crude oil and 68,000 barrels for condensate, while 6,000 barrels of oil products were exported.

Moreover, the EIA believes USA oil production will average 12.06 million bpd in 2019, up 1.18 million bpd from the prior year.

U.S. West Texas Intermediate (WTI) crude futures were weaker, however, dropping 12 cents from their last settlement to $52.59 per barrel, weighed by surging U.S. output as the booming American oil industry is not taking part in the announced cuts.

On Wednesday, oil prices showed losses as U.S. President Donald Trump once again tried to dampen OPEC's efforts to tackle falling oil prices amid market expectations on further output cut.

UAE Energy Minister Suhail Al Mazroui has said that Qatar's decision to withdraw from OPEC would not affect the continuation of production.

Iran maybe exporting around 1 million barrels per day now and any reduction may tighten the oil markets, especially around seasonally strong demand during summers.

Opec said today it had offset a drop in sanctions-hit Iranian oil exports and lowered the 2019 forecast of demand for its crude, underlining the challenge the producer group faces to prevent a glut even after last week's decision to trim output.

"The surge in US supply in recent months should be a reason for caution", Bank of America Merrill Lynch said in a note on Monday. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Oil prices remained on shaky ground on Tuesday after sliding by 3 percent the previous day, pressured by weakness in global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.

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