Monday's price dip tells us two things, says PVM Oil Associates in London: "Either the 1.2 million bpd reduction in the production of the OPEC+ group is not deemed sufficient by the market, or there are other bearish factors at work". "Today's decision is a very important step for the oil producers, the oil market and the future of the oil industry", he said. Many OPEC countries resent that Saudi Arabia, Kuwait, Iraq, UAE and Russian Federation have overproduced the allocation levels agreed to in November 2016 and in so doing brought oil prices down. The price of oil has fallen 25 percent recently because major producers and the USA are producing oil at high rates.
Oil prices extend gain on OPEC's output pact and Libya's field outage. This was offset by increases of 377,000 bpd from top exporter Saudi Arabia and an extra 71,000 bpd from the United Arab Emirates. Iran has been compromised as well as Libya and Venezuela, considering US sanctions.
Russia, the world's second biggest crude producer, will curb its production by around 228,000 bpd, 2 percent of its 11.4 million bpd production level in October, Energy Minister Aleksandr Novak confirmed Friday.
The force majeure on Sharara crude and associated facilities brings a daily loss to the Libyan economy of $32.5 million, NOC stressed.
After a dramatic summit of OPEC and non-OPEC members over the weekend that triggered an immediate boost in oil prices, the commodity has already dropped back to pre-meeting levels, falling 3.1 percent by the end of Monday.
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Still, Borussia Dortmund's 2-0 win at Monaco meant they rose above Atletico Madrid - who drew 0-0 at Club Brugge - to win Group A. Manchester City are guaranteed a last 16 berth and a draw at home to Hoffenheim will make sure of top spot.
Another American multinational investment bank and financial services firm Morgan Stanley said Monday that it lowered its oil price forecast by $10 a barrel for next year.
After the news that supply would be cut, the price of oil rallied above $60 dollars a barrel, where it has remained, with Brent Crude trading at around $61 on Wednesday, while WTI Crude sits a touch over $52.
Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.
This was determined by Reuters based on data from Petro-Logistics, which put Saudi oil exports at 8.105 million bpd in November up from 7.491 million bpd in October, and taking into account that the kingdom's shipments next month are set to fall by more than 1 million bpd under the OPEC cutbacks.