WTI Crude Oil and Natural Gas Forecast December 7, 2018

WTI Crude Oil and Natural Gas Forecast December 7, 2018

Saudi Arabia's Energy Minister Khalid Al-Falih said on Thursday reducing production by one million barrels per day would be enough for OPEC Plus.

"We are becoming the dominant energy power in the world", said Michael Lynch, president of Strategic Energy & Economic Research.

OPEC's de facto leader Saudi Arabia has indicated a need for steep output reductions from January, fearing a glut, but Russian Federation has resisted a large cut, news agency Reuters reported from Vienna.

"We continue to re-tool our export infrastructure along the Gulf Coast to expand capacity, and you continue to see strong demand globally for crude oil".

Qatar minister Saad Sherida Al-Kaabi said he had met several other OPEC ministers, but not his Saudi Arabian colleague. However, he noted that all the participants will be listened to in order to arrive at a consensus on the issue.

"This sits against a backdrop of rapid non-OPEC production growth - 2.4 million barrels per day year-on-year in 2018 and 2019, due mostly to gains in the United States output over both years". The OPEC-Russia alliance was made necessary in 2016 to compete with the United States' vastly increased production of oil in recent years.

Iraqi Oil Minister Thamer Ghadhban said Iraq, which is OPEC's second-largest producer behind Saudi Arabia, would support and join a cut.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures reversed earlier gains and are now trading lower shortly before the U.S. opening.

But a no-deal or an underwhelming agreement on Friday could send oil prices further down, potentially hurting production growth in the USA shale patch.

"A massive liquidation in long positions by money managers has dampened market confidence on oil prices considerably", said Benjamin Lu of Singaporean brokerage Phillip Futures.

Possibly complicating any Opec decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. The market has been lower all day due to concern that planned production cuts from the Organization of the Petroleum Exporting Countries will be smaller than originally anticipated.

"We have seen a great deal of stability and consistency, both operationally and, more importantly, in terms of security and bringing the sector back to normal", Falih said after meeting Ibe Kachikwu, minister of state for petroleum resources.

"The cartel has to go above and beyond the one million barrels cut, to at least 1.4 million to really steady the ship", said Neil Wilson, chief market analyst at Markets.com.

Although Russia, the largest producer in the wider group known as OPEC+, agreed to a cut in principle, the eventual size of their contribution remains undefined and will be key to putting together the final deal. Falih also noted that production from some OPEC producers is falling. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.

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