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Oil prices rise after Saudi Arabia warns of weaker demand can justify a decline of 1 million bpd

LONDON (Reuters) – Oil grew by more than 1 percent on Monday, which was the largest increase in a month…

LONDON (Reuters) – Oil grew by more than 1 percent on Monday, which was the largest increase in a month after Saudi Arabia. OPEC and its partners believed that demand was softened enough to justify a production loss of 1 million barrels a day.

A pump jacket is seen at sunset outside Scheibenhard near Strasbourg, France, October 6, 201

7. REUTERS / Christian Hartmann

Saudi Arabia, the world’s largest oil exporter, said on Sunday that it would cut its transport by half a million barrels a day in December due to the season’s lower demand.

Burned raw futures LCOc1 increased 92 cents a day to $ 71.10 per barrel per 0924 GMT, while US crude futures rose 50 cents to $ 60.69 per barrel.

Saudi Arabia energy minister Khalid al-Falih said Monday, OPEC and its partners agree that technical analysis shows that the need to reduce oil supplies next year must be around 1 million bpd from October levels to avoid an unwelcome construction of unused crude oil.

“The 2019 balance shows, especially in the first half, that there will be significant global overcrowding,” says Petromatrix analyst Olivier Jakob.

The Petroleum Exporting Countries Organization and the International Energy Agency release their monthly reports on the prospects for oil supply and demand later in the week.

“OPEC and IEA are releasing their updates to the oil market this week and the outlook for 2019 was already on the weak side. I think the reports will be even weaker, because they have to adapt to the increase in production in the United States, “said Jakob.

Oil prices have fallen by about 20 percent in the last month, which has diminished by a rapid increase in global supply and the threat of a slowdown in demand, especially from those of India, Indonesia and China whose currencies have weakened against dollar and eroded its purchasing power.

Production from Saudi Arabia, Russia and the United States alone has increased by 1.05 million bpd in the last three months, based on official production figures.

This has left OPEC encryption to adjust its own production, which is approximately 33.3 million bpd accounting for about one third of total global daily supply.

A group member Kuwait official said on Monday that the major oil exporters over the weekend had “discussed a proposal for some sort of cut-off (raw) delivery next year”, despite the fact that the official did not leave any details.

One of OPEC’s biggest problems right now is the increase in US production.

“One thing that is very clear, OPEC is in favor of a slate shocker when US crude production grew to 11.6 million barrels a day and will cross the 12 million threshold next year,” said Stephen Innes, Asia-Pacific Trade Manager at term broker Oanda in Singapore.

Further reporting by Henning Gloystein in Singapore; Editing Adrian Croft

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