Oil prices fall on swelling glut, economic growth concerns

"The big unknown is how President Trump will react to any production cuts", said analysts at ING.

Saudi Energy Minister Khalid al-Falih said earlier that OPEC needed Russian Federation to come on board with any cuts.

"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".

UAE Energy Minister Suhail Al Mazrouei said he was anxious about inventory build-up next year amid plenty of supply in the market. However, he noted that all the participants will be listened to in order to arrive at a consensus on the issue.

A cut of about 1 million barrels a day from the whole group should be adequate and "certainly we don't want to shock the market". The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

To raise prices, OPEC members, who account for more than half of the world's oil output, will spend the next two days evaluating whether to renew their cooperation with Russian Federation and other non-cartel producers, or simply slash production further.

International Brent crude oil futures were at $61.37 per barrel at 0240 GMT, down 71 cents, or 1.1 percent from their last close.

In a sign of easing tensions between the world's two biggest economies, Chinese oil trader Unipec plans to resume USA crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, people with knowledge of the matter said.

PRICE Futures Group's Phil Flynn on the outlook for oil prices. The cartel and its allies are meeting in Vienna this week, trying to make a tough choice to cut output and support prices, risking the loss of more market share to the US.

Qatar, which will leave on January 1, played only a small role in the organisation, providing just under two percent of OPEC's total output.

Iran hopes to be exempted from the cuts to keep its economy afloat, as the country faces harsh economic sanctions imposed by the US.

According to Reuters, al-Falih said all options were on the table if the Organization of the Petroleum Exporting Countries failed to reach a deal: The organization and its allies could cut output anywhere from 0.5 to 1.5 million barrels per day (bpd).

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

"A million (barrels cut) would be ideal", Al-Falih said.

Iran has said it is carefully monitoring the next steps by some OPEC members and their allies which have "arbitrarily" ramped up oil production, leading to a crash in prices. Trump wrote in a tweet on Wednesday.

While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump's decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi.

"The increasingly bipolar relationship between Saudi Arabia and the United States makes it extremely hard for the Saudis to announce a cut even if it [along with the GCC and Russia] decides to remove the volumes they have put into the market since May - around 1.5 million bpd", London-based consultancy Energy Aspects said in a note.

  • Anthony Vega