Published: Mon, May 28, 2018
Business | By Kate Woods

Oil prices fall as top 3 producers look to boost supplies

Oil prices fall as top 3 producers look to boost supplies

Sources informed Reuters that the meeting indicated they were ready to ease supply curbs that had pushed crude prices to their highest since 2014 despite oil prices losing more than 2 per cent by yesterday from the price advantage it had gained.

As a result of the news of the talks and rumoured cuts, Brent, the global benchmark, settled at $US76.44 a barrel on Friday, down nearly 3% for the day, 2.6% for the week and well below the three and a half year high of $US80.50 set 10 days ago.

US West Texas Intermediate crude futures were at $68.84 a barrel, down $1.87.

USA crude output C-OUT-T-EIA has already surged by more than 27 percent in the past two years, to 10.73 million bpd, ever closer to Russia's 11 million bpd.

Oil prices fell sharply Friday after Russian Energy Minister Alexander Novak met with his Saudi counterpart, Khalid Al-Falih, in St. Petersburg to discuss the deal, which has aimed to keep 1.8 million barrels a day off the market since January 2017.

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Next year, higher OPEC/Russian production, stronger US onshore growth and slightly weaker global demand "will lead to a better supplied market; moderate global stock builds are forecast for 2019", which should exert downward pressure on prices next year.

"I hope that minister Novak will gather us before the (Vienna) meeting. the oil price at $80 is already high", Alekperov said. Only Russia produces more, at around 11 million bpd.

Prices have soared since the start of the cuts past year, with Brent breaking through $80 this month, triggering concerns that high prices could crimp economic growth and stoke inflation.

Oil prices have surged by 40% since the Organization of the Petroleum Exporting Countries joined forces with Russian Federation other major exporters a year and a half ago to attempt to shrink a glut of stored oil that had been weighing on prices.

The move will be seen as a victory for U.S. president Donald Trump who last month attacked Opec for "artificially" boosting prices and has leaned on United States allies in the Gulf, including Saudi Arabia, to ensure oil markets remain well supplied.

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Oil prices fell back more than 3 per cent yesterday to just over $76 a barrel as the Opec cartel and other leading producers confirmed that they were considering increasing their output.

The national average for a gallon of regular gasoline Friday was $2.97, almost 6 cents above a week ago and roughly 60 cents above a year ago, according to the AAA motor club.

Novak was also quoted as saying on Saturday he expected Iran to reduce its output by no more than 10 percent as a result of the move by the United States to withdraw from a nuclear deal and reinstate sanctions against Tehran. But Mr. Falih said he "reiterated Saudi's commitment in collaboration with other producers, to guarantee availability of sufficient oil supply to compensate for potential loss and to meet rising demand".

Speaking in St Petersburg, Falih told Reuters that "all options are on the table" when asked about the targets on production cuts.

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