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Oil Prices Rise as Russia Might Reduce Crude Output

Published 11/29/2018, 11:50 PM
© Reuters.  Oil prices inched up Friday morning in Asia

Investing.com – Oil prices inched up Friday morning in Asia as major producer Russia reportedly agreed on the need to slash output ahead of an OPEC meeting next week in Vienna.

Crude Oil WTI Futures for January delivery rose 0.41% to $51.66 per barrel at 12:04PM ET (04:04 GMT) on the New York Mercantile Exchange, while Brent Oil Future for February delivery edged up 0.57% to $60.25 a barrel on London’s Intercontinental Exchange.

Russia might be changing its wait-and-see approach and be ready to join Saudi Arabia to cut crude output, Reuters reported. The two countries will meet with other OPEC members in Austria on Dec. 6-7 to reach a decision on output for the next six months. The kingdom has proposed cutting output by 1 million to 1.4 million barrels per day (bpd) to avoid excessive supply.

“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said a source quoted by Reuters.

Russian President Vladimir Putin is set to meet with Prince Mohammed bin Salman in Argentina at the G20 summit. Reuters reported that Putin said on Wednesday that Russia was in touch with the OPEC but it would be satisfied with an oil price of $60 a barrel, while the kingdom’s energy minister also said it will not slash oil output on its own.

Saudi Arabia’s proposal came after it raised output to compensate for an expected all in supply from Iran as a result of U.S. sanctions. However, Washington granted waivers to eight countries to continue importing oil from Iran. The kingdom is now pushing OPEC to cut output in fear of a global glut.

U.S. President Donald Trump is seeking to further reduce oil prices by urging producers to raise output. He is expected to discuss oil prices with both Saudi Arabia and Russia at the G20 summit.

“Trump tweets as if he has a joystick and he has everything under his command like he is playing one of these video games,” Tom Kloza, global head of energy analysis at the Oil Price Information Service, told the New York Times. He said if Trump succeeded in persuading them to maintain current output, “oil prices could go down to the low 40s.”

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