Oil prices rise after Saudi Arabia announces production cuts


New Delhi, Nov 13 (AFP): Oil prices climbed on Monday as the world's biggest supplier Saudi Arabia announced plans to cut production, in the face of fears of oversupply. Saudi Arabia's energy minister said Monday that oil-producing nations should cut output by one million barrels per day to re-balance the market.

Khalid al-Falih's comments follow a meeting in Abu Dhabi at the weekend, where the OPEC group and its allies had already started laying the groundwork to cut supply in 2019, reversing an almost year-long expansion.

Saudi Arabia had said the kingdom would cut its production by 500,000 barrels per day.

Oil prices advanced steadily through Monday, with both Brent Crude and West Texas Intermediate (WTI) seeing gains of more than a dollar per barrel.

"In the short term this is a positive for oil, but we must question the impact longer term unless it's the sign of more to come from OPEC," said Neil Wilson, chief market analyst at Markets.com.

"Saudi Arabia cannot act alone though -- realistically it needs to pull together OPEC allies, and critically Russia, to curb production if it wants prices to hold. The language from Russia suggests it is not ready to follow the Saudis yet."

Last week, higher US energy stockpiles drove WTI crude to its longest losing streak in more than 30 years, while Brent Crude dropped below USD 70 a barrel for the first time since April.

- China focus -

In equities, Asian markets were largely flat Monday following lacklustre US trading at the end of last week and nervousness over Chinese growth.

Hong Kong and Tokyo hovered between positive and negative territory, both closing up 0.1 per cent.

Taiwan was flat, Seoul slid 0.3 per cent, and Sydney closed up 0.3 per cent.

"Asia stocks are trading tentatively as global growth worries and uncertainty over the course for oil prices weighs on sentiment," said Stephen Innes, head of trading for Asia-Pacific at OANDA.

"Investors are... left to ponder if this is the beginning of a more definitive downturn or just another wobble."

China's economy is in the spotlight this week, with key monthly data expected Wednesday and stocks tumbling last week on mounting concerns of a slowdown.

Chinese e-commerce giant Alibaba took a record USD 30.7 billion in orders on Sunday during its annual "Singles Day" shopping frenzy.

However sales growth slowed to 27 per cent this year from 39 per cent in 2017, adding to mounting concerns over the outlook for the Asian powerhouse.

"But where we can get some comfort from this number is that Chinese consumers are slowing, not collapsing," Junheng Li, founder of JL Warren Capital LLC, told Bloomberg News.

Major retailers got a Single's Day lift in China, with Suning.com gaining 1.5 per cent and Shanghai Bailian Group climbing 2.2 per cent.

China's banking stocks were mixed however after the government gave new guidance on requirements for banks to lend to private companies. Last week bank shares dropped as investors balked at what were seen as unprecedented government demands on lenders.

Industrial & Commercial Bank of China (ICBC), the Bank of China and the China Merchants Banks all started the week with gains.

In Europe, where pressure is mounting on British Prime Minister Theresa May over her Brexit plan, the FTSE opened up 0.6 per cent in early trading.

  

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Comment on this article

  • Flavian, Mangalauru/Kuwait

    Tue, Nov 13 2018

    Fuel price and election time.
    BJP bigwigs know how to bring the prices down!
    Votes makes all the difference.
    First reduce drastically and after the elections same old game.

    DisAgree Agree [1] Reply Report Abuse

  • Valerian Dsouza, Udupi / Mumbai

    Tue, Nov 13 2018

    Oil price rise will affect inflation and inflation will affect voting pattern in India.
    Understanding and educated people will know the reality of oil prices
    But voters who voted relying upon price reduction promises will feel cheated and won't budge.
    Reap what you sow is natural law no one can change.

    DisAgree Agree [8] Reply Report Abuse

  • Flavian, Mangaluru/Kuwait

    Tue, Nov 13 2018

    Indian government got another excuse to increase Petrol/Deisel prices.
    Petrol price @ Rs. 100 mark is bound to reach shortly.

    DisAgree Agree [16] Reply Report Abuse

  • Sahil, Mangaluru

    Tue, Nov 13 2018

    Government ko gujjus business ka adda bana ke rak diya .

    DisAgree [1] Agree [15] Reply Report Abuse

  • Harish K, Udupi

    Tue, Nov 13 2018

    Oil price rise only for India. WTI futures for Nov has come down to USD 58,87 today lowest for the last few months. Fooling people with false news to increase more .

    DisAgree Agree [21] Reply Report Abuse

  • gm, mlur

    Tue, Nov 13 2018

    We got a chance to increase.

    DisAgree Agree [17] Reply Report Abuse

  • mohan, Mangalore

    Tue, Nov 13 2018

    Oil price from 84 to come down 72 PM.reduces 40 paise only..... and broadcasted like he reduced 50 rupees.... after that oul price come down to 62 dollar .. but nothing is reduced to customers. .now 62 to little increased around 60 paise....but see the news .... this media must punished for misguiding people..

    DisAgree Agree [26] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Tue, Nov 13 2018

    This is called "Blackmailing" ...

    DisAgree Agree [25] Reply Report Abuse


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