US Energy Secretary Perry To Saudis: We Want Stable Supply And Prices

Kotak positive on GAIL, ONGC after OPEC production cut decision

OPEC and non-OPEC producers agreed at a meeting in Vienna on Friday to a new level of production cuts from January to June 2019, setting it at 1.2 million barrels per day from the current rate of 1.8 million barrels per day.

Fereidun Fesharaki of energy consultancy FGE said in a note that the OPEC-led cuts would likely be "insufficient to mop up the inventories in the targeted three-month period till the end of the first quarter of 2019".

Saudi Arabia could reduce its daily crude oil shipments overseas by as much as 1 million barrels next month, Reuters reports, quoting unnamed sources close to Riyadh.

At 0846 GMT, February WTI crude oil is trading $51.04, down $0.16 or -0.31% and February Brent crude oil is at $59.78, down $0.19 or -0.32%. Traders also continued to express concerns that global economic weakness would lead to a drop in demand which could offset any gains from the planned production cuts.

That's despite Saudi Arabia's energy minister Khalid Al-Falih announcing Friday that 900,000 barrels a day of the kingdom's crude will be taken out of the market between November and January, in addition to cuts from OPEC's allies. "The decision was a very important step for the oil producers, the oil market and development of the oil industry in general". Since October, 2018 Oil price have dropped by nearly 30%, and this decision is expected help oil producers.

More news: Japan finds 2nd U.S. Marine crew member after planes collide

Some countries have been applied a compromise within the framework of the agreement on reduction of oil production.

According to the International Energy Agency (IEA), the demand for crude oil produced by OPEC countries at the world market is now at 31.3 million barrels.

OPEC heavyweight Saudi Arabia, the world's biggest crude oil exporter, will carry most of the burden by lowering its output by 500,000 bpd. The contributions from OPEC and non-OPEC will correspond to 800,000 barrels per day and 400,000 barrels per day, respectively.

Anxious by a drop in oil prices and rising supplies, Opec and its allies including Russian Federation last week agreed to return to supply cuts next year.

Kotak Institutional Equities expects a gradual recovery in crude prices from the recent lows, as the proposed curtailment by OPEC and Canada will balance the global oil supply demand in the near term, especially as seasonally weak demand season gets over in Q1CY19.

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