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Oil Rebounds From Crash, Climbs 3% As OPEC Weighs Supply Cut

November 14, 2018 at 17:31 by Andrew Moran

Crude oil futures are rebounding midweek after recording their 12th consecutive loss on Tuesday. In just six weeks, the soaring oil market went from four-year highs to a bear market, but prices are paring some of those losses as the Organization for Petroleum Exporting Countries (OPEC) weighs a supply cut. A new industry outlook was also released on Wednesday that provides some insight into the global market.

December West Texas Intermediate (WTI) crude futures advanced $1.51, or 2.71%, to $57.21 per barrel at 15:02 GMT on Wednesday on the New York Mercantile Exchange. In the last month, crude prices have crashed 18%, wiping out their year-to-date gains.

Brent, the international benchmark for oil prices, is also rallying in the middle of the trading week. January Brent crude futures surged $1.92, or 2.93%, to $67.39 a barrel on London’s ICE Futures exchange. Despite Brent’s 15% plunge this month, it is still up 6% so far in 2018.

The oil cartel has been public about its intent to cap production levels in 2019 to tighten international supplies and boost prices. OPEC officials have confirmed that they will discuss cutting output at next month’s meeting. It is estimated that OPEC and allied producers might slash production by as much as 1.4 million barrels per day (bpd).

But President Donald Trump is warning OPEC against this move. Upon hearing the reports, Trump tweeted that “oil prices should be much lower based on supply.” The White House has been encouraging Saudi Arabia to increase output before their June meeting to offset the decline from Iran amid the renewed sanctions on one of the world’s biggest crude producers.

Meanwhile, the crude industry got a glimpse into the future courtesy of the International Energy Agency (IEA)’s World Energy Outlook report. According to the report, the US will account for approximately 75% of global oil growth and 40% gas expansion over the next six years. The increase in supplies will be driven mostly by shale fracking, with US shale oil inventories projected to double to 9.2 million barrels per day (bpd) within the next eight years.

The Energy Information Administration (EIA)‘s weekly report will be released on Thursday because of the holiday-shortened week.

In other energy commodities, January natural gas futures spiked $0.47, or 11.29%, to $4.62 per million British thermal units (btu). January gasoline futures rose $0.027, or 1.78%, to $1.55 a gallon. January hearing oil futures surged $0.05, or 2.47%, to $2.10 per gallon.

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