The WTI Crude Oil market fell rather hard during trading on Thursday, slamming into the $50 level yet again as OPEC concluded their meeting without announcing any new cuts.
The Organisation of the Petroleum Exporting Countries (Opec) has made a planned cut in oil production effectively conditional on the contribution from non-Opec producer Russian Federation, delegates said on Thursday as the group gathered in Vienna for a meeting aimed at supporting battered oil prices. He said that they don't think that the U.S. will benefit from an over-supplied market for an extended period of time where investment flow stops and the fantastic growth in USA stale and is brought to a halt again just like in 2015-2016.
Concern over an emerging supply glut has decimated oil prices - West Texas Intermediate, the US benchmark, fell more than 2 percent to $51.56 per barrel on Thursday - but President Trump has pushed for cheaper oil, urging other countries to refrain from output cuts.
The comments came a day after US President Donald Trump said he wanted OPEC to keep production high to ensure low oil prices.
Oil prices briefly pared losses after government data showed USA crude stockpiles fell by 7.3 million barrels in the week through November 30.
Oil producers appeared to be coalescing around a plan to remove 1.3 million barrels per day from the market earlier in the week.
"We continue to re-tool our export infrastructure along the Gulf Coast to expand capacity, and you continue to see strong demand globally for crude oil".
Led by Saudi Arabia, OPEC's crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million barrels per day (bpd).
Nonetheless, Saudi Arabia is in a delicate position, in the wake of the murder of opposition journalist Jamal Khashoggi. The alliance has transformed OPEC into a duopoly in which Russian Federation, which isn't a formal member of the cartel but part of the production cuts alliance, is asserting its power.
"This sits against a backdrop of rapid non-OPEC production growth - 2.4 million barrels per day year-on-year in 2018 and 2019, due mostly to gains in the U.S. output over both years".
The EIA said the USA has been a net oil importer in weekly data going back to 1991 and monthly data starting in 1973. A cut of a million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Wilson.
"The number that we need is going to be less than 1.3 [million]".
"The stakes are high now for OPEC". A delegate from another country said some members believe a smaller reduction would be adequate. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States' vastly increased production of oil in recent years. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.