Oil prices skid amid global stock market slump, swelling U.S. supply

Oil prices skid amid global stock market slump, swelling U.S. supply

Oil prices skid amid global stock market slump, swelling U.S. supply

"Yes, we will have a cut", Oman's oil minister Mohammed bin Hamad Al Rumhi said on Wednesday evening.

"I'm cautiously optimistic that a deal gets done, but the devil will be in the detail", said Mohammad Darwazah, a director at Medley Global Advisers.

The two major players in the production cut talks, Saudi Arabia and Russian Federation, seem to be on board with a production cut, but the volume of cuts has yet to be determined, and it is also uncertain if they will go it alone should others refuse. "It is still under discussion", one delegate said.

Oil prices fell along with weak stock markets on Thursday, but trading was tepid ahead of a meeting by the Organisation of the Petroleum Exporting Countries (OPEC).

By how much oil production will be reduced is unclear, but de facto leader of OPEC Saudi Arabia, the world's largest oil producing country, reportedly wants to curb output by at least 1.3 million barrels per day, or 1.3 percent of global production.

Russia's second-largest oil producer, Lukoil PJSC, is ready to comply with any request from the Kremlin but hopes output cuts won't be necessary, said Chief Executive Officer Vagit Alekperov.

Alberta Production Cuts Send Canadian Crude Soaring
In fact, the price differential between Canadian oil and the USA benchmark oil hit a record high of $50 per month last month. Alberta's oil industry is producing roughly 190,000 bpd in excess of available takeaway capacity.

Oil prices fell 1 percent on Wednesday, weighed down by swelling United States inventories and a plunge in global stock markets as China's government warned of increasing economic headwinds.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

Despite the Iranian official's remarks, Kuwait's oil ministry said on its Twitter account on Wednesday that a long-term cooperation agreement is expected to be signed between OPEC and non-OPEC countries. "Being too cautious on the words, to please President Trump, runs however the risk of diluting the message", said Olivier Jakob from Petromatrix consultancy.

Donald Trump has often complained about OPEC this year as higher crude oil prices have raised fuel cost.

"We think Opec will spend some time to choose the words being used". Only the headline has been changed.

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