December 12, 2019
Crude oil markets were cautious following the meeting of OPEC last week, and the announcement by the International Energy Agency (IEA) it expects a modest increase in worldwide supply and demand.
Crude oil was trading in the $63-$64 range on the international market from Brent crude oil and in the $58-$59 range for West Texas Intermediate on the New York Mercantile Exchange.
OPEC agreed to cut another 500,000 barrels per day (b/d) from it previously announced cuts of 1.2 million b/d in an effort to deplete the oversupply worldwide. Saudi Arabia led the agreement by announcing it will reduce production another 170,000 b/d. Russia, a non-member of OPEC but one of the three largest oil producers, said it will cut another 70,000 b/d. Iraq, a member of OPEC, said it would reluctantly cut 50,000 b/d. Iran and Venezuela have involuntarily reduced exports because of other factors, including sanctions by U.S.
The IEA report, released about two weeks before the OPEC meeting, said production from non-OPEC countries, such as the U.S., will increase from 1.8 million b/d to 2.3 million b/d next year. The Energy Information Administration (EIA) at the U.S. Department of Energy predicts U.S. production will increase 900,000 b/d to 13.2 million b/d in 2020 even though the drilling rig count has declined about 20 percent this year…..