Counter-Trend Buyers Pinning Hopes on Production Cuts, Trade Deal

Counter-Trend Buyers Pinning Hopes on Production Cuts, Trade Deal

Counter-Trend Buyers Pinning Hopes on Production Cuts, Trade Deal

Investors are focused on this weekend's G-20 summit in Argentina, where leaders from the U.S., Russian Federation and Saudi Arabia - the world's three biggest oil producers - will gather in a prelude to OPEC's meeting next week in Vienna.

Saudi Arabia led suppliers to cut production two years ago to curb a glut, then reversed course in June on concerns that USA sanctions on Iran could create a shortage.

Iraq resumed pumping crude this month on a test basis through a Kurdish-controlled pipeline to Turkey, according to an oil ministry spokesman.

Earlier the President of Russia Vladimir Putin has called the oil price of 60 dollars "quite acceptable" for the country.

Thanks to a flexible currency and a much lower fiscal break-even price than the Saudis, Putin said this week that oil at $60/bbl was "absolutely fine" for his country.

Brent crude, the global benchmark, was down 65 cents, or 1.1 percent, at $59.56 a barrel by 9 a.m. ET (1400 GMT), after trading as high as $61.27.

Petrol prices have slid globally amidst the upheaval in the oil market following the sanctions on Iran and increased output from OPEC as well as America.

The cooperation had been a "a 100 percent" success, Putin said, adding that this was largely due to Saudi Arabia and Crown Prince Mohammed bin Salman, the "initiator" of the deal. "The question is whether there's room for agreement among the U.S., Saudi Arabia and Russian Federation on what the right price is". At current prices, Saudi Arabia, which is heavily dependent on petroleum exports, can pay its bills and most oil companies can make a profit.

FGE estimates that Iraq could pump as much as 4.7 million barrels a day next year - depending on what OPEC and other producers decide at their December 6 meeting - compared with about 4.5 million in November.

Things will come to a head this weekend at the Group of 20 summit in Buenos Aires, a meeting that could shape the oil market in 2019 and affect everything from the war in Yemen to the share price of Exxon Mobil Vladimir Putin will also play a key role - Russian Federation and Saudi Arabia have spent the last two years working together to manage the oil market. "If no action is taken, oil prices could certainly drop further, while a production cut should lead to a sizable rebound for these severely oversold levels".

Bullish counter-trend traders are also hoping for some movement on global trade issues when the United States and China hold discussions at the G20 summit this week-end in Argentina.

Saudi Arabia benefits by drilling the cheapest oil in the world because of low capital spending and absence of gross tax on oil.

By August 2018, Saudi Arabia's production was up by 630,000 barrels per day compared with June 2014 and Russia's output had climbed by 525,000 bpd.

"We are in contact with OPEC, and we are ready to continue our joint efforts if needed", Putin said on Wednesday.

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