Oil producers see oversupply, eye cutting output

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Kristian Rouz - The shale oil boom in North Dakota's Bakken oil field continues to set new records, rendering U.S. crude prices lower, which, in the face of increasing United States energy exports, is poised to weigh on worldwide oil prices as well. Oman's Oil Minister Mohammed Al-Rumhy said "there is a consensus that there is an oversupply and we need to do something".

As uncertainty beclouds the future of crude prices, members of the Organisation of Petroleum Exporting Countries (OPEC), met yesterday November 11th, in Abu Dhabi to decide on how to cut crude supply in order to forestall further declines in price.

Crude oil futures have spiked in early trade on Monday, finding support on reports that Saudi Arabia will cut production levels in December.

The oil producers have chose to act after oil dropped as much as 20 percent in one month, after hitting a four-year high in early October. But even just signalling that producers could cut production by 1% can make a huge difference in energy markets and beyond.

The world's second and third crude producers - after they were overtaken by the United States thanks to shale oil - Russian Federation and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash.

Saudi Arabia has been pumping 10.7 million bpd since October, Falih said.

"This announcement of at least Saudi Arabia reducing probably will firm the price", BP Chief Executive Officer Bob Dudley said in a Bloomberg TV interview.

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Major oil producers meet in Abu Dhabi on Sunday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash.

West Texas Intermediate for December delivery declined 26 cents to end the session at US$59.93 a barrel on the New York Mercantile Exchange.

"We have to study all the factors", he said.

Mr Al Falih expressed concern, however, over the recent downward turn of the oil markets, which had through the summer held about $80 per barrel, only to fall to $69 on Friday, after the US Energy Information Administration reported higher US production figures and the White House granted waivers to eight of Iran's top oil buyers.

This may be the beginning of a stabilisation in the oil market after crude prices crashed by about 20% since early October. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

The latest price slump comes after the United States boosted production of shale oil, while Saudi Arabia, Russia and others raised supplies of crude amid signs of slowing demand.

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