Oil markets were up early, then flat and currently trending slightly down in trading Monday morning after comments from the United Arab Emirates energy minister suggested that the global oil market was “correcting” and he “expected everyone” to reduce oil supply under the agreement reached earlier this month in Vienna. Details of that agreement calls for OPEC and its allies to reduce output by 1.2 million barrels per day starting in January 2019. In addition to the OPEC decision, the Canadian province of Alberta mandated a production cut of 8.7% or 325,000 bpd due to limited pipeline capacity in that region. Additional price support was also coming from the latest U.S. rig count data which showed drillers reduced rigs in the week ending December 14 to 873 which was the lowest it’s been since mid-October. “This, when combined with Saudi Arabia is to cut exports to the United States to draw down inventory builds should provide a short term base despite global slowdown fears, which continue to resonate” said one analyst based in Singapore. Without major headlines today some notable things to watch this week are:
- The Federal Open Market Committee will begin its two day meeting on Tuesday
- Tuesday afternoon the American Petroleum Institute will release its weekly stats
- Wednesday morning the Energy Information Association will release its weekly stats
- Possible government shutdown on Friday over Mexican wall funding
With regards to the Fed’s meeting this week, Michael McCarthy, chief markets strategist at CMC markets said “The potential for a significant movement in the U.S. dollar clearly has an impact on oil pricing with the Fed meeting. We’re looking outside the oil markets for its next major move.”
As we get closer to the holidays look for increased volatility with lighter volume in this market sector.
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