Big OPEC meeting coming up on Thursday, December 6
On Thursday, December 6, OPEC will hold its 175th (Ordinary) OPEC Meeting, as they call it. Basically, they are meeting to discuss the oil market.
Joining OPEC in Vienna will be other key non-OPEC producers, namely Russia.
The importance of this meeting is to see whether key producers (mainly Saudi Arabia and Russia) will agree to extend prior, globally coordinated, oil output cuts.
Saudi Arabia and Russia did already agree to extend the cuts over the weekend at the G-20 conference. However, this was not quantified and there's no guarantee that they will all stick with cutting. They probably will, but don't get too excited just yet.
U.S. President Trump opposes a production cut, so if there is a cut on December 6, it will be interesting to see how President Trump responds.
Recently, the OPEC advisory committee recommended an oil production cut of 1.3 million barrels per day (bpd) from October 2018 levels to bring the oil market back into balance.
In general, some of this can be really confusing.
Specifically, why would OPEC and other nations such as Russia implement/continue a coordinated oil production cut when the U.S. continues to boost oil production higher and higher?
Maybe this is why there's some hesitance coming out of Russia regarding this. Yes, OPEC and Saudi Arabia recently increased production too, but that was just to offset losses of oil volumes that were being sent from Iran (post-sanctions) to key user of Iranian oil.
Currently, OPEC and its non-OPEC allies that they are working with are still talking. They are trying to work towards a deal to cut at least 1.3 mln bpd, but so far, they are still going over the deal.
Don't forget, the provincial government of Alberta, Canada surprised the market yesterday with oil production cuts of 325K bpd (Alberta market was oversupplied by ~200K bpd, so the cut more than makes up the oversupply there). So, the OPEC/non-OPEC cut, if there is one, would be added to this 325K reduction that's happening in Canada.
Following the unwinding in the oil market that began in early October, which caused WTI crude oil to tank $26.12, or 34.2%, to as low as $50.29/barrel seen on November 28, oil has settled down at least a little bit. Jan WTI crude oil is now -$0.03 at $52.92/barrel.