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Oil prices skid amid global stock market slump, swelling USA supply

06 December 2018

Yet the group still lacks an agreement on crucial details that could convince traders they're serious about preventing an oversupply next year and boosting prices.

Russia, a major oil producer but not a member of OPEC, will meet with the producer cartel on Friday to discuss production levels, and it is widely expected that a supply cut will be agreed. "It is still under discussion", one delegate said.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said United States crude inventories rose by 5.4 million barrels in the week to Nov 30, to 448 million barrels, in a sign that USA oil markets are in a growing glut.

"Hopefully, OPEC will be keeping oil flows as is, not restricted".

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The Organization of the Petroleum Exporting Countries and its allies continued to haggle over the size of potential crude-production cuts in Vienna on Wednesday.

OPEC's de facto leader, Saudi Arabia, has indicated it wants the organisation and its allies to curb output by at least 1.3 million bpd, or 1.3 percent of global production.

Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to cut output by at least 1.3 million barrels per day, or 1.3 percent of global production.

The slide in United States oil followed a tumble in global stock markets on Tuesday and Wednesday, with investors anxious about the threat of a widespread economic slowdown.

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"I am optimistic. There will be a deal, but it is unclear how much OPEC and how much non-OPEC will contribute". Those differences persisted after Wednesday's meeting, OPEC delegates said.

The two major players in the production cut talks, Saudi Arabia and Russian Federation, seem to be on board with a production cut, but the volume of cuts has yet to be determined, and it is also uncertain if they will go it alone should others refuse. If Russia does agree a cut, it would take three to four months to fully implement it, he said.

Three delegates said OPEC and its allies could cut output by 1 million barrels per day if Russian Federation contributed 150,000 bpd of that reduction.

In the Middle East, Saudi Arabia produced a record 11.3 million barrels per day (bpd) in November, adding to the swelling glut. Libya and Nigeria, which were exempt from making cuts in the 2016 deal that created the OPEC+ group, have accepted that they will have to participate this time, said Al Rumhy. "Especially the big boys - they would want to keep this cut very close to their heart".

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Oil prices skid amid global stock market slump, swelling USA supply