During a news conference at a gathering of the Organization of Arab Petroleum Exporting Countries in Kuwait on Sunday, the United Arab Emirates' energy minister, Suhail al-Mazrouei said that OPEC and its allies could organize an extraordinary meeting to discuss deeper output cuts if the current 1.2 million barrels cut were not enough the balance the markets. Funds took big bets on oil's rally, only to see the commodity drop by more than 40 percent since the October highs.
Crude oil prices plunged more than 6 per cent to the lowest level in more than a year on Monday, pulling back sharply late in the session as fears of an economic slowdown rattled the market. Today at 09:35 AM ET, the global benchmark had recovered slightly, rising 1.34 percent to US$51.45 a barrel, after shedding as much as 6.2 percent in the previous trading session to close at US$50.47 a barrel, Reuters reports.
Stock market volatility is also pressuring oil prices.
Russian Energy Minister Alexander Novak said on Tuesday that oil prices would become more stable in the first half of 2019, supported by Opec and non-Opec countries' joint efforts to cut output.
OPEC and other major oil producers negotiated to cut oil production by nearly 1.2 million barrel a day, in the first week of December. Bloomberg quoted a Rakuten Securities analyst as saying, "There are several bearish factors in oil markets, and the situation won't improve anytime soon".
Brent for February settlement added $1.12/bbl to $51.59/bbl on the London-based ICE Futures Europe exchange after earlier dropping to as low as $49.93. The market settled early ahead of the Christmas holiday.
US rough CLc1 was up 74 pennies at $43.27. It was also the largest one-day price move and percentage gain since November 30, 2016, though even the sharp rally still leaves the contract down over 7% for December to date.
Global stocks rebounded on Wednesday on the back of the Trump administration's attempt to shore up investor confidence and a report on strong US holiday spending. "Oil prices could rise if OPEC+ make announcements about specific measures" including additional cuts, Yoshida said. The global benchmark crude traded at an $8.25 premium to WTI.
"However, OPEC and Russia's increasingly active management of supply through production cuts is expected to keep the prices of crude oil elevated", said K Ravichandran, Senior Vice President and Group Head-Corporate Ratings, ICRA.