Oil traded near $56 a barrel after snapping a record losing streak as traders assessed signs of rising USA crude inventories against the prospect of OPEC and allies cutting output. However, I am expected in the December OPEC meeting to be the catalyst to give some relief to the falling Oil market as they announce production cuts.
The markets will be facing an oil glut in 2019 as supply will outpace demand.
"Trump's message was meant to keep OPEC in check" after the group signaled they may agree to cut production, Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone from Tokyo.
The Energy Information Administration reported a huge crude oil inventory build for the week to November 9 of 10.3 million barrels, arresting an improvement in oil prices that started yesterday after a sharp drop earlier this week. Brent plunged 6 percent to settle at an eight-month low in the previous session. US crude had declined for a record 12 consecutive sessions to the lowest since November 2017.
Oil markets are being pressured from two sides: a surge in supply from OPEC, Russia, the Unites States and other producers; and increasing concerns about a global economic slowdown. A slump in USA equity markets and the dollar's climb to an 18-month high also weighed on crude, which slid into a bear market last week.
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"OPEC and Russian Federation are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on December 6", said Andersson. Trump admonished Saudi Arabia for planning to curb output and lamented prices that settled below US$56 a barrel for the first time in a year.
The agency raised its forecast for oil output growth from countries outside the OPEC to 2.4 million bpd this year and 1.9 million bpd next year.
Also, the former President, International Association of Energy Economist ( IAEA), Prof Adeola Akinnisibu, said many barrels of Iranian crude would still get to the market, as long as the United States allows some countries to buy the product.
The rise in USA production is contributing to higher stockpiles.
Inventories of oil in OECD countries rose by 12.1 million barrels in September to 2.875 billion barrels, the IEA said, adding that for the third quarter as a whole, stocks rose 58.1 million barrels, or at a rate of 630,000 bpd, the biggest increase since 2015.