Oil down 2 percent after Trump urges OPEC not to cut supply

Oil down 2 percent after Trump urges OPEC not to cut supply

Oil down 2 percent after Trump urges OPEC not to cut supply

The U.S. decision to grant waivers that will allow importers of Iranian oil to keep buying in spite of sanctions confounded expectations of a looming supply crunch, helping trigger crude's collapse.

During its last meeting, the Organisation of Petroleum Exporting Countries (OPEC) and its allies led by Russian Federation acknowledged that an oversupply of oil in the market is imminent in 2019.

Brent crude, the European benchmark, was trading just above $65 a barrel while U.S. crude futures stood just below $56 - its lowest mark for 12 months.

In its monthly report, OPEC said world oil demand next year would rise by 1.29 million barrels per day, 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.

Saudi Energy Minister Khalid al-Falih said on Monday that Opec agreed there was a need to cut oil supply next year by around one million barrels per day from October levels to prevent oversupply.

Aviation and oil marketing companies' stocks rose in trade today as crude oil prices fell below the $69 per barrel mark after US President Donald Trump urged OPEC not to cut supplies to prop up the market.

Oil prices have dropped significantly in recent weeks, with the USA benchmark price dipping below $60 per barrel, according to Market Watch.

Both benchmarks have fallen more than 20 percent since peaking at four-year highs in early October.

Capital Economics said it was clear that "fears over excess supply in the oil market are starting to build". Those lower prices likely quieted Trump, but production cuts could again boost prices at the pump.

President Donald Trump has tweeted that they shouldn't cut production, setting up a standoff between the US administration and OPEC before it meets in Vienna on December 6.

Trump appeared to criticize the announcement in a Monday tweet: "Hopefully, Saudi Arabia and OPEC [Organization of the Petroleum Exporting Countries] will not be cutting oil production".

It added: "Non-OPEC oil supply growth in 2018 is estimated at 2.31 mb/d, an upward revision of 0.09 mb/d from the previous month's assessment".

In addition to Trump's tweet, the price of oil has come under pressure because of fears that weakening economies outside of the USA could diminish demand.

What are countries doing to help raise oil prices?

With the United States 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.

Riyadh indicated on Monday it was on course to ignore the United States president's wishes at OPEC's next meeting due in December because it saw a need to reduce OPEC output by a collective one million barrels per day during 2019.

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