Oil rebounds from steep sell-off as OPEC, partners discuss supply cut

Brent crude, the European benchmark, was trading just above $65 a barrel while United States crude futures stood just below $56 - its lowest mark for 12 months. The report notes that "the United States remains committed to reducing Iranian oil exports to zero from the 1.8 million barrels per day seen today".

"Hopefully, Saudi Arabia and OPEC will not be cutting oil production".

With this type of trend, falling stock prices cause investor confidence to plummet right along with the oil prices.

Oil rose about 1 percent on Wednesday, recouping some of the previous session's heavy sell-off, on growing prospects that the Organization of the Petroleum Exporting Countries and allied producers would cut output at a meeting next month to prop up prices.

Trump on Monday said he hoped OPEC will not cut production, making it clear he wants oil prices to fall. The country's crude output is expected to average 12.06 million bpd in 2019, passing 12 million bpd sooner than expected on surging shale supply, the U.S. Energy Information Administration said this month.

But with unexpectedly broad exemptions granted by Washington that allow Asia's main oil consumers to continue buying crude from Iran, the overall supply drop has not materialized.

"It is becoming clearer that as we move closer towards 2019, the market will see a sizeable surplus at least over the first half of 2019", ING said.

It said that it expected "subdued global economic growth" to drive demand even lower than Opec was now forecasting. USA light crude was US$1.55 lower at US$58.38.

The International Energy Agency expects crude and condensate output in Russian Federation to stand at 11.2 million barrels per day this year and to increase up to 11.5 million barrels per day in 2019, according to its Oil Market Report.

One source said Iran does not want to have a production target in a new agreement as it is facing lower exports due to US sanctions.

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The Opec+, as the alliance is called, cut output by 1.8 million barrels of oil per day starting January last year up to May this year to lower oil inventories and shore up prices, which plunged to less than $30 a barrel in the first quarter in 2016.

Despite Saudi Arabia's pledge to cut production, the decline in prices has accelerated this week.

Tuesday's seven-percent drop was due to ongoing worries about weakening global demand and oversupply. There is no need to take any action to halt the decline of oil prices that started a month ago, Russia's Energy Minister Alexander Novak said earlier this week.

  • Wendy Palmer