Russian, Saudi energy ministers meet on G20 sidelines

Eileen GuzmanDec 03, 2018

However, the two countries have not announced any supply cuts in the near future.

"I explained to (Suarez) the results of the OPEC+ agreement on the stability of oil markets, which serves the interests of producers, consumers and investors and supports the global economy", he wrote. "And whatever is the final figure, we agreed to monitor the market situation and react to it quickly".

Brennock went on to predict that "Against this backdrop, the most likely outcome of next week's OPEC meeting is a fudge: Russian Federation and Saudi Arabia will agree to curb production, but by less than is needed to prevent a supply imbalance in early 2019".

Saudi Arabia said through its state-owned press agency that Riyadh and Moscow had held talks in Buenos Aires about "rebalancing" the oil market.

"This might be the critical breakthrough for OPEC and non-OPEC to cut", said Derek Brower, a director at consultant RS Energy Group.

IG Market Analyst, Kyle Rodday says the news post-OPEC meeting could be significant. At the opening of Brent was trading at 59,73 per barrel, up 18 cents below the closing level ($59,91). Yet the view that the oil market is oversupplied is a signal the cartel is laying the groundwork for action.

The development could lead to a possible deal in the upcoming OPEC meeting scheduled for next week in Vienna.

Oil futures reached near four years in early October, only to drop to a more year plus lows in late last week - the price of the global marker, Brent crude fell from a peak settlement of $US86.29 a barrel on October 3 to $US58.76 on November 28.

"From Argentina to Alberta, the oil market news is about supply curtailments", said Norbert Rücker, head of commodity research at Swiss bank Julius Baer. "However, there's concern that the cuts will not be big enough and also that the message may be intentionally unclear, in order not to get President Trump upset". Prior to the collapse in oil prices, the kingdom was responsive to Trump's demands.

Oil closed out its worst month since the global financial crisis a decade ago as all eyes turned to this weekend's G20 summit for signs that Saudi Arabia and Russian Federation can head off a worldwide supply glut.

The price of a barrel of Brent crude in February was $60,23 (+0,53%).

France's President Emmanuel Macron, who has faced intense protests against growing gasoline prices in his country, also called for cheaper oil at the G-20 summit.

While presumably the advisory board's recommendation buoyed analysts who are optimistic about the cartel slashing production, Stephen Brennock, oil analyst at PVM Oil Associates, stated in a research note published Friday that Russian Federation and the Saudis differ on the need for cuts, and this leaves the kingdom and allied non-OPEC producer facing its "toughest test yet" to find a compromise.

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