Brent heads back upwards after breaking below $70 on Friday

By A/S Global Risk Management.

Michael Poulson, Senior Oil Risk Manager at Global Risk Management. Image credit: A/S Global Risk Management

Updated on 12 Nov 2018 08:57 GMT

Brent oil price broke below $70 on Friday and after a highly volatile day ended just above $70.

At the time of writing, however, oil prices are heading back upwards and Brent is around $71.7. Adding to the bullish sentiment is news of Saudi Arabia comments that the huge oil producer is planning a reduction of 0.5 mio. barrels in December compared to November output. According to the Saudi Energy Minister, "we are going to do everything we can to keep inventories and supply demand fundamentals within a reasonable narrow band around balance...". A week into the U.S. sanctions against Iran having taken effect, the talk of the town has gone from supply shortage to risk of a supply glut.

Over the weekend, the Joint Ministerial Monitoring Committee (JMMC) met in Abu Dhabi. According to a press release, the committee noted that the oil producing countries which are part of the 2016 production cut agreement complied with the deal 104% last month. The JMMC will meet in Vienna on 5 December, a day ahead of the official OPEC meeting.

On Friday, the weekly oil rig count from Baker Hughes showed a whopping addition of 12 oil rigs in the U.S to 886, which is the highest in roughly a three-and-a-half years. The U.S. is currently producing crude oil around record levels and could touch 12 mio. barrels per day in production next year according to the Energy Information Administration (EIA).

Turning to the economic data calendar, today sees no major releases, which could cause market jitters, but later this week, Chinese and Japanese key data is released as well as Euro Zone GDP and U.S. Core CPI (inflation).

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