The Prospect Of International Oil Markets Is Uncertain

For some time, the international crude oil market has been in a violent shock, the international oil price as a roller coaster. It rose to a near four-year high in late September and early October and then fell for seven straight weeks. Oil prices have been volatile since November 23rd, when they plunged another 8% to their lowest level in a year. International oil prices are down more than 30 percent from their high in early October. Typically, a drop of more than 20 per cent from a recent high is considered a bear market.

 

Although the international oil price has shown a slight rise recently, the oil price outlook is still not optimistic. Worries have been exacerbated by higher-than-expected output from major oil producers and slowing global economic growth. The outlook for oil supply has been growing rapidly, with the us, Saudi Arabia and Russia all increasing production. At the same time, a short-term easing of us sanctions on Iran has also helped improve expectations for oil supplies. Saudi Arabia produced nearly 11m b/d in November, a record 10.65m b/d in October. Russian crude production has been above 11m b/d for months, with October's production rising to a 27-year high. U.S. crude oil production also remained at an all-time high of 11.7 million barrels a day, according to the U.S. energy information administration, while U.S. commercial crude oil inventories rose to 446.9 million barrels a day, the highest since December 2017. The rise in crude output from the world's three largest oil producers alone is enough to put downward pressure on global oil prices.

 

On the other hand, the global economic slowdown in oil demand growth slowly also makes further pressure on oil prices. Trade tensions have heightened investor concerns about the global economy. In its latest world economic outlook, the imf lowered its forecast for global economic growth this year and next for the first time since 2016. The organisation for economic co-operation and development's latest economic outlook also cuts overall global growth to 3.5 per cent in 2019. The organization of petroleum exporting countries (Opec) cut its forecast for 2019 crude demand growth for the fourth month in a row to 1.29 million barrels a day, down from 1.36 million barrels a day previously forecast.

 

The imbalance of supply and demand in the international crude oil market has attracted the attention of Opec and other non-opec oil producers such as Russia. Production cuts are likely to be high on the agenda as producers meet in Vienna on December 6 to decide production policies for the next six months. Analysts generally believe that the meeting will determine the trend of oil prices in the future, but there is still great uncertainty about whether oil-producing countries can successfully cut production. Saudi Arabia had previously said it wanted producers to start cutting production again early next year. But Saudi Arabia faces resistance from the us and Russia over whether to cut production again.


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