Major oil producers discussed potential reductions to crude production at their latest meeting, as concerns over growth in output combined with expectations for a slowdown in demand, prompting prices to post their largest monthly loss in more than two years. The meeting, held in Abu Dhabi over the weekend, came ahead of the latest updates on supply and demand due out this week from the Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA). The Joint OPEC-non-OPEC Ministerial Monitoring Committee debated over whether an output reduction next year of about one million barrels a day would be necessary to avoid a glut of global supplies, according to The Wall Street Journal. JMMC officials, which include Organization of Petroleum Exporting Countries member Saudi Arabia as well as non-member Russia, monitor implementation of the crude output-cut agreement that began on Jan. 1, 2017, between members and nonmembers. The EIA recently reported that U.S. crude-oil production reached 11.3 million barrels a day in August, surpassing 11 million barrels a day for the first time on a monthly basis and making the nation the leading crude-oil producer in the world. Oil prices logged hefty October declines, with U.S. benchmark West Texas Intermediate crude CLZ8, -1.89% posting a loss of nearly 10.8% and global benchmark Brent crude LCOF9, -1.72% down 8.8% for the month—their largest monthly percentage losses since July 2016. Saudi Arabia and other major oil producers had raised production as global supplies tightened ahead of U.S. sanctions on Iran’s energy sector but as the sanctions kicked in earlier this month, the U.S. granted waivers to eight nations, allowing them to temporarily continue to import Iranian crude. They included China, which is among the largest importers of Iran’s crude.
A decision on production is expected at the next OPEC meeting, which will be held on Dec. 6 in Vienna.
In a press release dated Sunday, the JMMC said that prospects in 2019 point to “higher supply growth than global requirements,” and also noted th at the “dampening of global economic growth prospects … could have repercussions for global oil demand in 2019—and could lead to widening the gap between supply and demand.” “Comments from this weekend’s meeting between OPEC and other major producers suggest that policymakers are increasingly concerned by the recent fall in oil prices,” said Jason Tuvey, senior emerging markets economist at Capital Economics, in a note Monday. “OPEC’s de facto leader, Saudi Arabia, floated the idea of fresh oil output cuts. Oil Minister Khalid al-Falih said that the “Kingdom would lower its supply by 500,000 [barrels per day] in December.” “Algos don’t sleep and have a built-in advantage to pounce on all opportunities to violently shove a market,” said Michael Bertuccio, founder and chief executive officer of Houston-based HB2 Inc., a private oil and gas company, referring to a type of automated trading done with mathematic formulas. There’s “no better time” for that to happen “than a quiet Friday [after Thanksgiving] when all the humans are in food comas fueled by turkey.”