Economy

Saudi Arabia pumps record amount of oil as Trump piles on pressure

Saudi Arabia pumps record amount of oil as Trump piles on pressure”

USA crude inventories rose by 3.5 million barrels last week to 442.7 million, industry group the American Petroleum Institute said late Tuesday, more than analysts' forecasts for an increase of 769,000 barrels.

Around 10:00 a.m. EST WTI front-month futures traded at $51.77 per barrel, a 0.3 percent increase, while Brent front-month traded at $60.73, a 0.3 percent increase. The question for many investors and traders is whether a bottom has been reached or if it is still a falling knife.

Investors, especially buyers, are hoping that the leaders of G20 will do something to ease the trade war between China and the USA to support the falling oil prices.

The American crude marker teeters near the $50 threshold as the Saudi output surge combines with larger-than-expected exports of Iranian oil after Trump granted sanctions waivers to some nations. Firstly, the RSI is issuing an oversold signal.

Oil prices dropped again after a sixth-week loss. Sluggish GDP growth and low-priced non-Opec supply should put a cap on oil prices in the absence of any large-scale geopolitical disruption.

Oil prices have crashed 30% in a matter of weeks but Saudi Arabia isn't hurting just yet. Oil prices dived 8% on Friday for the biggest weekly losses in almost three years. This year also marked the highest gasoline price for the Monday before the Thanksgiving holiday weekend since 2014.

"Even if [Brent] prices fall further to $40-$50 a barrel, immediate balance of payments strains are unlikely to emerge", Capital Economics said in a report this week about the impact of the slump on Gulf countries.

Still, a price increase from current levels hinges on action from OPEC+.

Oil closed a volatile day back in negative territory, weighed down by uncertainty over OPEC's appetite for curbing output as the rising dollar and renewed trade tensions diminished crude's appeal.

Saudi Energy Minister Khalid al Falih on Thursday said the kingdom's output this month would of 10.6 million barrels per day.

The downward pressure comes from surging supply and a slowdown in demand-growth which is expected to result in an oil supply overhang in 2019. "Rather, we hold strong conviction that current prices for Dec19 WTI-Brent at $-8.8/bbl provides an attractive opportunity to play our view on relative global supply/demand dynamics, with a potential for a significant widening below $-15/bbl".

What will the demand scene in India be next year? .

Those levels are up around 0.5 million bpd - equal to 0.5 percent of global demand - from October and more than 1 million bpd higher than in early 2018, when Riyadh was curtailing production together with other OPEC members. Amid slower demand growth, we expect a near-term upside risk to our demand due to a pre-election demand surge in India in Q1 of 2019 and a possible de-escalation of the trade dispute between the United States and China.

Trump may try to convince bin Salman and Russia President Vladimir Putin of his case to keep oil prices low at the G20 summit in Buenos Aires, Argentina, later this week.



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