Energy agency: Global oil supply jumps, sending prices lower

Energy agency: Global oil supply jumps, sending prices lower

Energy agency: Global oil supply jumps, sending prices lower

Another analyst says that even as Saudi Arabia is the most influential of all oil producers, that they can't maintain their rate of current production for long.

U.S. crude futures settled down US$4.24 a barrel, or 7.1 per cent, to US$55.69 a barrel.

OPEC+ is considering cutting oil output by more than the 1 million barrels a day Saudi Arabia proposed earlier this week, according to people familiar with the matter.

The Indian market too welcomed the fall in worldwide oil prices and opened higher today.

Oil clung to its rebound as tension over US sanctions against Saudi Arabia overshadowed a jump in American crude stockpiles. America's increasing inventories suggests "the nation's crude exports could become more active, resulting in excess global supplies".

Oil markets slipped again on Wednesday, extending losses from a 7% plunge the previous session as surging supply and the spectre of faltering demand scared off investors.

Fearing a renewed glut like in 2014, when prices crashed under the weight of oversupply, the Organization of the Petroleum Exporting Countries (OPEC) is discussing supply cuts.

Oil prices are getting hit by both rising supply and falling demand.

With the USA now the world's top oil producer ahead of Saudi Arabia and Russian Federation, there are indications that traders will keep selling crude at lower prices as a result of oversupply.

Depending on the final baseline for the production cuts, the reduction could be in the range of 1 million to 1.5 million barrels a day, one of the delegates said.

Oil prices were hit on Monday after U.S. "Oil prices should be much lower based on supply!" the president said in a Twitter post on Monday.

Much of the expectations of the supply cuts were driven by earlier comments from Khalid Al-Falih, energy minister for Saudi Arabia, who told media that producers need to cut about 1 million barrels per day (bpd) from October production levels. The IEA estimates total USA oil supply will rise by 2.1 million bpd this year and another 1.3 million bpd in 2019, from a current record of more than 11 million bpd.

OPEC warned on Tuesday that an oil supply glut could emerge in 2019 as the world economy slows and supply from rival producers rises more quickly than expected, building a case for a policy U-turn to cutting output at a meeting December 6. He's kept at it even as prices have plunged, tweeting on November 12 that he hoped Saudi Arabia and OPEC wouldn't cut output.

A new round of OPEC-led supply cuts in 2019 would further support USA shale oil production, potentially repeating the cycle that played out in 2014.

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