UAE Energy Minister Suhail al-Mazrouei, left, talks to Khalid Al-Falih, Saudi Energy and Oil Minister, in the opening ceremony of the Abu Dhabi International Exhibition & Conference, ADIPEC, in Abu Dhabi, United Arab Emirates, Monday, Nov. 12, 2018.
U.S. energy firms last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday.
However, at the global level, it will be a new blow to consumers, who will have to pay more for gasoline, and will increase transport expenses of the companies. As a result, the price of crude oil in Midland, Texas, in the heart of the Permian Basin, has traded at a discount of as much as $18 per barrel to the price of WTI at the main Cushing, Oklahoma, hub. Prices for both WTI and Brent crude - the USA and global benchmarks, respectively - have plunged about 20% since early October. The group agreed in June to restore some of that output, and producers with spare capacity have been pumping more oil since then.
Brent crude futures LCOc1 reversed course late in the session, settling down 6 cents at $70.12 a barrel.
The dollar (.DXY) also put pressure on oil, hovering near 16-month highs, making crude more expensive for importers using other currencies.
"We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability", he said.
The fall also came as the USA -dollar hovered near 16-month highs on Tuesday, making oil imports more expensive for any country using other currencies at home. He noted that in 2015 when OPEC lifted its output by about 2 million barrels a day, just over 2% of global demand at the time, oil prices decreased by roughly a third, while oil stocks experienced a simultaneous plunge.
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In fact, all three countries are pumping at or near record highs, with other OPEC members and exporting nations also turning on the taps.
Major oil producers said Sunday that crude supply next year would outstrip demand, calling for new strategies based on production adjustments.
"Saudi Arabia can not act alone though - realistically it needs to pull together OPEC allies, and critically Russian Federation, to curb production if it wants prices to hold".
Analysts said the continued high output of US shale oil and the scheduled outage of USA refineries lately had increased crude storage levels, leading to the continued weakness of WTI price. Turn about: Opec members and its 10 allies are mainly anxious about the increasing USA production (11.4 million barrels a day).
"What is more important is the production of shale oil from America", Tun Dr Mahathir Mohamad told CNBC in an interview in Singapore yesterday.
He explained: "I think it's meant to be a long-term relationship and it started off about oil prices but you see it taking on other dimensions, for instance, Saudi investment in Russian LNG (liquefied natural gas) and Russian investment in Saudi Arabia".
The calculus for oil-producing countries in the Gulf is different.