Monday, November 12, 2018
By
AFP

Oil prices advance as Saudi to cut output

By
AFP
|
Riyadh on Monday unveiled plans to trim its production by 500,000 bpd from Dec, calling for a global output cut of one million bpd. — Reuters FILE

LONDON: Oil prices advanced Monday after crude kingpin Saudi Arabia unveiled plans to cut output in the face of global oversupplies, and pressed other producers to follow suit.

Higher crude prices failed to lift the market overall in London however, with the FTSE 100 index lower in afternoon trading.

Tobacco stocks were among those that slumped, with British American Tobacco shedding 9.56 percent to £29.93 and Imperial Tobacco losing 3.0 percent on reports of a planned US ban on menthol cigarettes, which are seen as posing a greater health risk than traditional ones.

In the eurozone, the Frankfurt and Paris stock markets dropped as well, weighed down in part by lingering concerns over Italy´s high debt and ahead of Tuesday´s EU deadline for Rome to revise its 2019 budget.

In early New York trading, tech shares led stocks lower, with equity markets open but Treasury markets closed to mark Veterans Day.

The euro struck a 17-month low at $1.1240 before recovering slightly, hit also by Brexit clouds which weighed on the pound as well.

"Continued uncertainty over the pathway for Brexit is providing greater downside for sterling," noted Joshua Mahony, market analyst at IG trading group.

The European Union´s chief Brexit negotiator warned ministers from the other 27 member states on Monday that no deal has been sealed on Britain´s departure from the bloc.

"Meanwhile, a Saudi... output cut for December has helped boost ailing oil prices," Mahony said.

Saudi Arabia´s energy minister on Monday called for a global output cut of one million barrels per day to re-balance the market, as Riyadh unveiled plans to trim its own production by 500,000 bpd from December.

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 reduce supply in 2019, reversing an almost year-long expansion.

Oil prices have shed about one fifth of their value over the past month on oversupplies and signs of a softer-than-expected impact from US sanctions on Iranian crude exports.

In Vienna, the IAEA said Monday that Iran was sticking to conditions of the nuclear deal reached with six nations in 2015.

In trading, benchmark oil contract Brent North Sea crude gained ground.

"In the short term this (output cut) 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 dropped below $70 a barrel for the first time since April.

Elsewhere on Monday, Shanghai stocks rebounded ahead of key Chinese economic releases due this week.

Key figures

Oil - Brent Crude: UP 77 cents at $70.95 per barrel

Oil - West Texas Intermediate: UP 34 cents at $60.53 per barrel

Euro/dollar: DOWN at $1.1266 from $1.1351 at 2200 GMT Friday

Pound/dollar: DOWN at $1.2907 from $1.3022

Dollar/yen: UP at 113.80 yen from 113.76 yen

London - FTSE 100: DOWN 0.5 percent at 7,070.91 points

Frankfurt - DAX 30: DOWN 1.5 percent at 11,357.74

Paris - CAC 40: DOWN 0.7 percent at 5,073.62

EURO STOXX 50: DOWN 0.8 percent at 3,204.47

Tokyo - Nikkei 225: UP 0.1 percent at 22,269.88 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 25,633.18 (close)

Shanghai - Composite: UP 1.2 percent at 2,630.52 (close)

New York - Dow: DOWN 0.6 percent at 25,847.01