The oil market has ‘gotten ahead of itself.’

Here’s what could drag it back down to the $40s

  • There are two forces at work in the oil market, keeping crude trading in a tight range.
  • Increased shale production weighs on the market even as OPEC shows restraint.
  • But the seasonal factor will have the biggest influence on oil prices until the end of the year.

Oil workers make a pipe connection on a drilling rig near Encinal, Texas.

Eddie Seal | Bloomberg | Getty Images
Oil workers make a pipe connection on a drilling rig near Encinal, Texas.

There are two forces at work in the oil markets today creating a tug of war. On the one hand you have U.S. shale producers on a quest to reach 10 million barrels a day in production amid falling seasonal demand. On the other hand you have the perception that the oil glut that has gripped the world over the last few years is coming to an end because of OPEC restraint and increased demand from improving economies.

These forces are keeping the oil market range bound, with crude oil prices trading between $47 and $54 per barrel.

The reality in my opinion is that while OPEC has stuck to its agreement of 2016 to limit production to 32.5 million barrels a day, oil oversupply continues. It’s true that oversupply is about half of what it was a couple of years ago, according to the Office of Economic Development, but it is still there.

Libya which is not part of the agreement continues to produce more oil than it did a year ago. It recently announced it wants to get back to 1.25 million barrels a day, or about double what it produces today.

“Production beginning to rise and demand beginning to fall is not a recipe for higher prices. I can envision oil dropping as low as $45 by mid-January.”

But the seasonal factor will have the biggest influence on oil prices until the end of the year.

Demand generally drops from October through mid-January as summer driving season ends and refineries enter turnaround stage (to get ready for next summer’s driving season.) Gasoline starts to rally around Valentine’s Day, as oil refineries gear up for summer using more oil to make gasoline.

Refineries are entering turnaround now, so you’ll see supplies build because refineries aren’t using as much oil. And while gasoline and diesel have been negatively impacted by recent hurricanes Harvey and Irma, supplies are beginning to be replenished.

Production beginning to rise and demand beginning to fall is not a recipe for higher prices. I can envision oil dropping as low as $45 by mid-January.

I do see light at the end of the tunnel. I’m looking for prices to rise in 2018 because the economy is improving and people are spending money. A durable goods report that came out last week tripled expectations, showing the economy is solid. Still, expect a couple more months of pain. The market is ahead of itself right now.

OPEC who? US oil producers are moving into the Asian market


  • In a shakeup to the established order, U.S. crude oil exporters are moving more cargoes toward Asia
  • Exports from U.S. “tight oil” extracted from shale formations alone may swell to over 3 million barrels a day by 2022 — with a third of that volume absorbed by Asia, said one economist

Workers aboard a Shell platform in 2013 as it sails away for the Mars B Field in the Gulf of Mexico.

Eddie Seal | Bloomberg | Getty Images
Workers aboard a Shell platform in 2013 as it sails away for the Mars B Field in the Gulf of Mexico.

Mars and Poseidon are coming to Asia.

That is, those two varieties of U.S.-produced crude oil are spearheading American exporters’ direct challenge to OPEC for market share in Asia.

In a shakeup to the established order, U.S. crude oil exporters are moving more cargoes toward high-growth Asia as they capitalize on favorable price differentials and as supply curbs by the Organization of Petroleum Exporting Countries force Gulf producers to withdraw from their traditional demand heartland.

That’s good news for Asian buyers who benefit from a more diversified basket of crude oil on offer and as competition between suppliers drives down prices.

“See it as a bigger buffet table for Asian refiners who have more supply options and sellers to engage with,” said John Driscoll, director of JTD Energy Services in Singapore and a former oil trader whose career spans nearly 40 years.

India received its first American oil cargo of 1.6 million barrels on Oct. 2, the result of Prime Minister Narendra Modi’s visit to the U.S. in June where he negotiated contracts to supply three Indian refineries with nearly 8 million barrels.

‘Markets 101’

All of this change was kicked off when the Obama administration lifted a 40-year-old ban on exporting domestic oil in December 2015.

Now, more U.S. crude is on the way if market economics stay favorable.

One of the decisive factors dictating global oil flows is the price gap between two international benchmarks: Brent crude oil and U.S. counterpart West Texas Intermediate. Typically, the higher Brent’s premium is over WTI, the stronger the pull for lower-priced U.S. crude from outside buyers.

The gap between Brent and WTI hit its widest level in two years in early October at over $6.00 a barrel. That spread “is the one everyone hones in,” said Driscoll, though other differentials are also closely monitored by oil traders for clues generating possible arbitrage leads, as is the gap between U.S. Mars crude oil – increasingly seen as a key export grade – and WTI.

And exporting is an increasingly popular option: U.S. crude exports rose to a record 1.98 million barrels a day in the week ending September 29.

That’s “classic Oil Markets 101,” said Michael Wittner, head of oil research at Societe Generale, “too much crude in the U.S. and too little crude elsewhere means that U.S. prices weaken relative to global prices, and exports increase to address the imbalance.”

OPEC on notice

Exports from U.S. “tight oil” extracted from shale formations alone may swell to over 3 million barrels a day by 2022 — with a third of that volume absorbed by Asia — said Ed Rawle, chief economist at Wood Mackenzie.

That signals a change in the energy world order as OPEC influence wanes. Some energy commentators believe the fracking boom has helped the U.S. take the title of the world’s “swing” producer from Saudi Arabia. The Americans, it’s thought, now possess the capacity to respond to fluctuations in market demand.

As tankers laden with U.S. crude move eastwards, OPEC is sure to take notice.

“Traditional OPEC suppliers will need to watch this space and price their crude competitively as up to 50 percent of incremental crudes into Asia could come from non-OPEC,” Rawle said.

Whether more U.S. crude gets shipped east will hinge on how fast capacity can be added to key U.S. export terminals such as the Louisiana Offshore Oil Port, America’s only deep-water tanker port in the Gulf of Mexico.

“The emergence of the U.S. as a significant exporter to Europe or Asia will only be progressive and contingent on the development of Gulf Coast export capacity and crude price differentials remaining favorable,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas. “For now, these exports remain opportunistic.”

Oil prices jumped about 2 percent on Friday

Oil up 2 percent, Brent hits $60 per barrel on support for extending curbs

NEW YORK (Reuters) – Oil prices jumped about 2 percent on Friday, with global benchmark Brent crude rising above $60 per barrel, on support among the world’s top producers for extending a deal to rein in output and as the dollar retreated from three-month peaks.

Saudi Arabia and Russia declared their support for extending an OPEC-led deal to cut supplies for another nine months, the Organization of the Petroleum Exporting Countries’ secretary general said ahead of the group’s next policy meeting on Nov. 30. The pact currently runs to March 2018.

Brent futures LCOc1 rose $1.14, or 1.9 percent, to settle at $60.44 a barrel after hitting a session peak of $60.53, the highest since July 2015 and more than 35 percent above 2017 lows touched in June.

U.S. West Texas Intermediate crude oil (WTI) CLc1 ended the session up $1.26, or 2.4 percent, at $53.90 after reaching a session peak of $53.98 a barrel, the highest since early March.

For the week, Brent was 4.6 percent higher, notching its third straight weekly gain. U.S. crude rose 4.7 percent for the week.

U.S. crude’s gains have lagged the global benchmark amid rising domestic output.

Oil prices have been hovering near their highest levels for this year amid signs of a tightening market, renewed support this week of an extension of production cuts and tensions in Iraq.

“What is interesting is that the pop in WTI futures moved above the Sept. 28 high,” said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.

“So even though the dollar is giving back some of its move, crude may now be trading off of a new driver, the technical breakthrough to a new high.”

The dollar trimmed its earlier gains versus a basket of currencies .DXY following a Bloomberg report that U.S. President Donald Trump is leaning toward Federal Reserve Governor Jerome Powell as his pick to head the U.S. central bank.

A weaker dollar makes greenback-denominated commodities, including oil, cheaper for holders of other currencies.

“I think the combination of short-covering and Chevron and Exxon both missing their production guidance for the third quarter has resulted in the market strength today,” said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.

TransCanada Corp (TRP.TO) said in a filing on Thursday that it is seeking to raise the temporary discounted spot rate for light crude on its 700,000 barrel-per-day Marketlink pipeline. That sent WTI’s discount to global marker Brent WTCLc1-LCOc1 to the widest in a month.

OPEC and other major producers including Russia have pledged to reduce production by around 1.8 million barrels per day (bpd) to drain a global supply glut.

“If OPEC and their non-OPEC partners can agree to extend their production curtailments through 2018, then we estimate the oil market will remain in modest under-supply until 2019,” U.S. investment bank Jefferies said.

Rising U.S. crude production remains an issue for OPEC as it strives to clear a global supply overhang.

Government data showed that U.S. crude production rose 1.1 million bpd last week to 9.5 million bpd after a decline due to Hurricane Nate, while U.S. oil exports hit a new record four-week average of 1.7 million bpd. [EIA/S]

U.S. drillers added one oil rig in the week to Oct. 27, but the rig count, an indicator of future production, fell by 13 for the month, the biggest such decline since May 2016, data showed.

Hedge funds and other money managers raised their bullish wagers on U.S. crude futures and options in the week to October 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

“Momentum may take us a little further here but longer term, I would expect a supply response here domestically,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

“It’s a market we feel is rangebound (for U.S. crude) in the mid-$40s to mid-$50s.”

Additional reporting by Christopher Johnson, Julia Payne and Dmitry Zdhannikov in London, Jane Chung in Seoul and Henning Gloystein in Singapore; Editing by Marguerita Choy and Susan Thomas

France’s Total third-quarter net profit lifted by strong output and cost savings


  • Total said its net adjusted profit for the quarter hit $2.7 billion, in line with a Reuters poll of analysts’ forecasts
  • The company said its cost reduction target for the year will be more than $3.6 billion compared with the $3.5 billion it had previously expected, as it continued to drive down costs

Photo: Total

French oil and gas major Total reported a 29 percent jump in third-quarter net profit as ramp-ups and new projects lifted production, while high demand for petroleum products led to a sharp increase in its refining margin.

Total’s oil production rose 6 percent in the quarter, while adjusted net operating income from its upstream exploration and production branch soared 84 percent compared with the same period a year ago, buoyed by a rise in the Brent oil price.

“The group took full advantage of the favorable environment thanks to the performance of its integrated model and its strategy to reduce its breakeven point,” Chief Executive Patrick Pouyanne said in a statement.

Net adjusted profit for the quarter hit $2.7 billion, in line with a Reuters poll of analysts forecast.

Production increases in projects such as Kashagan in Kazakhstan, Moho Nord in Republic of Congo and Angola LNG, as well as new concessions such as Al-Shaheen in Qatar, contributed to the 2.581 million barrels of oil equivalent output per day.

Total maintained its annual production growth target of around 5 percent in 2017, which is expected to remain steady at that level until 2022.

In the downstream segment, Total said its European refining margin indicator rose sharply to $48.2 per tonne in the third quarter of 2017 compared with $41.4 in the third quarter of 2016 thanks to strong demand for products after last month’s hurricane Harvey led to numerous shutdowns of refining capacity.

“The downstream benefited from favorable refining margins and increased its results by 18 percent compared to the second quarter, despite the impact of Hurricane Harvey on American operations,” Pouyanne said.

Total said cost reductions for 2017 will be more than $3.6 billion, above a $3.5 billion target, as it continued to drive down costs such as reducing the number of expensive contractors in places like Nigeria and Angola.

The company said its cost of production dropped below $5 per barrel during the past three months, ahead of the target of $5.5 per barrel for the year.

It reiterated a target of $5 billion in savings by 2020 while pursuing efforts to reduce its breakeven point.

Total’s pre-dividend organic breakeven — excluding acquisitions and divestments — is expected below $30 per barrel this year, and should continue to fall to $20 in 2019.

Are Crude Oil Bulls Controlling the Bears?


Is Saudi Arabia Supporting the Crude Oil Bulls?

Crude oil futures  

December US crude oil (DWT) (SCO) futures contracts rose 1.1% to $52.47 per barrel on October 24, 2017. It’s the highest settlement since April 17, 2017. Brent oil (BNO) futures contracts rose 1.7% to $58.33 per barrel on October 24, 2017—near a four-week high.

On October 24, 2017, Saudi Arabia said that it would help reduce the global crude oil glut by extending the ongoing production cut deal, which supported oil (BNO) (USL) prices. Oil prices also rose due to the supply outages in Iraq following the Kurdish independence referendum. The expectation of a fall in US gasoline inventories also supported oil prices.

Saudi Arabia 

On October 24, 2017, Saudi Arabia’s energy minister said that the country focused on reducing OECD crude oil inventories below the five-year average. He also said that after the expiry of the ongoing production cut deal, OPEC might consider prolonged output caps, which is bullish for oil (BNO) (UCO) (DBO) prices. It benefits oil producers (XOP) (XLE) like Shell (RDS.A) and ExxonMobil (XOM).

API’s US crude oil inventory estimates

The API (American Petroleum Institute) released its crude oil inventory report on October 24, 2017. It estimates that US crude oil inventories rose by 519,000 barrels on October 13–20, 2017. A Reuters survey predicted that US crude oil inventories would have fallen by 2,600,000 barrels during the same period. US oil prices fell in post-settlement trade on October 24, 2017, due to the surprise build in US crude oil inventories.

The U.S. Energy Information Administration will release its weekly crude oil inventory report at 10:30 AM EST on October 25, 2017.

Wall Street 

The NASDAQ (QQQ) and S&P 500 (SPY) rose on October 24, 2017. They closed at record levels on October 20, 2017. The Dow Jones Industrial Average Index (DIA) closed at a new record on October 24, 2017. The possibility of the US tax reform’s success has been driving Wall Street. The strong 3Q17 earnings results have also been pushing Wall Street higher.

Series overview 

In this series, we’ll discuss the API’s gasoline and distillate inventory data. We’ll also discuss US gasoline demand and China and India’s crude oil imports.

Are Crude Oil Bulls Controlling the Bears? PART 2 OF 5

Gasoline and Distillate Inventories Could Support Oil Futures

Crude oil futures 

December US crude oil (UWT) (DWT) (DBO) futures contracts fell 0.25% to $52.35 per barrel in electronic exchange at 2:00 AM EST on Wednesday, October 25, 2017. Prices fell due to the surprise rise in US crude oil inventories reported by the API (American Petroleum Institute) the previous day. US crude oil prices are at a six-month high. Prices (USO) (UCO) could have also fallen due to profit-booking.

December E-Mini S&P 500 (SPY) futures contracts fell 0.15% to 2,563.5 in electronic exchange at 2:00 AM EST on October 25, 2017.

API’s gasoline and distillate inventories  

The API released its crude oil inventory report on October 24, 2017. It estimates that US gasoline and distillate inventories fell by 5.75 MMbbls (million barrels) and 4.95 MMbbls on October 13–20, 2017.

The market expected that US gasoline and distillate inventories would have fallen by 0.01 MMbbls and 0.86 MMbbls during the same period. Any fall in gasoline and distillate inventories is bullish for gasoline (UGA) and diesel prices. Higher gasoline and diesel prices are bullish for crude oil (USO) (UCO) (SCO) prices. Higher oil prices benefit oil producers (IEZ) (IYE) like Sanchez Energy (SN), Newfield Exploration (NFX), and Energen (EGN).

EIA’s US crude oil inventories  

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report at 10:30 AM EST on October 25, 2017. If the EIA reports a larger-than-expected fall in US crude oil inventories, it would benefit oil (OIL) (DTO) prices. For more on US crude oil inventories, read the previous part in this series.

If the EIA reports a larger-than-expected fall in US gasoline and distillate inventories, it would support gasoline and diesel prices. As a result, it would help crude oil prices.

In the next part, we’ll discuss how gasoline demand impacts crude oil prices.

Are Crude Oil Bulls Controlling the Bears? PART 3 OF 5

Is US Gasoline Demand Impacting Crude Oil Prices?

US gasoline demand 

The EIA (U.S. Energy Information Administration) estimates that the four-week average US gasoline demand fell by 76,000 bpd (barrels per day) to 9,345,000 bpd on October 6–13, 2017. The demand fell 0.8% week-over-week but rose by 262,000 bpd or 2.8% YoY (year-over-year). The YoY rise in the gasoline demand is bullish for gasoline (UGA) and crude oil (OIL) (USO) (DTO) prices.

Volatility in gasoline prices impacts US refining (CRAK) companies like Holly Frontier (HFC), Western Refining (WNR), Marathon Petroleum (MPC), and PBF Energy (PBF).

US gasoline consumption’s peak and low 

US gasoline consumption peaked at 9.8 MMbpd (million barrels per day) in July 2017. Consumption hit a record due to the record number of miles driven by US drivers in the summer. On the other hand, gasoline demand hit 8.0 MMbpd in January 2017—the lowest level since February 2014. The demand has risen 16.8% from the lows in January 2017.

US gasoline consumption estimates 

The EIA estimates that US gasoline consumption will average 9.32 MMbpd in 2017. It’s expected to rise by 0.5 MMbpd to 9.37 MMbpd in 2018. US gasoline consumption could hit an annual record in 2018. Consumption averaged a record 9.32 MMbpd in 2016.


Record gasoline demand would likely benefit gasoline prices. Higher gasoline prices could support crude oil (DBO) (OIL) prices. Changes in oil (UCO) (UWT) prices impact energy producers (IXC) (FENY) like SM Energy (SM), ConocoPhillips (COP), and PDC Energy (PDCE).

In the next part, we’ll discuss how China’s crude oil imports impact oil prices.

Are Crude Oil Bulls Controlling the Bears? PART 4 OF 5

China’s Crude Oil Imports Are near a Record Level

China’s crude oil imports

China and the US are the top two crude oil consumers in the world. China’s General Administration of Customs reported that China’s crude oil imports rose by ~1,000,000 bpd (barrels per day) to ~9,000,000 bpd in September 2017—compared to August 2017. Imports rose 12.5% month-over-month and are at a four-month high. They hit record 9, 210,000 bpd in March 2017.

China’s crude oil imports rose due to the rise in imports from China’s teapot refiners. The imports also rose as refiners returned from seasonal maintenance. High crude oil imports from China (FXI) are bullish for crude oil (BNO) (DWT) (UCO) (USO) prices. High oil imports have a positive impact on tanker rates. Higher tanker rates benefit oil tankers like DHT Holdings (DHT) and Nordic American Tankers (NAT).

China’s Crude Oil Imports Are near a Record Level

 China’s crude oil imports in the first nine months

In the first nine months of 2017, the crude oil imports from China are at 8.5 MMbpd (million barrels per day)—12.2% more than the same period in 2016. China’s crude oil imports averaged 7.6 MMbpd in 2016 and 6.7 MMbpd in 2015.

China’s crude oil imports drivers

The imports are estimated to rise in 2017 and 2018 due to the fall in domestic crude oil production, a rise in imports from Chinese teapot refiners, and more strategic petroleum reserve.


High Chinese crude oil imports would likely benefit crude oil (BNO) (DBO) prices.

In the next part, we’ll discuss how India’s crude oil imports impact oil prices.

Are Crude Oil Bulls Controlling the Bears? PART 5 OF 5

India’s Crude Oil Imports Hit a Record: Good for Oil Bulls

India’s crude oil imports

India is the second-largest crude oil consumer in Asia after China. It’s the third-largest consumer in the world. The Petroleum Planning and Analysis Cell of India reported that the country’s crude oil imports rose 19% to ~4,830,000 bpd (barrels per day) in September 2017—compared to August 2017. India’s crude oil imports rose 4.2% from the same period in 2016—the highest level ever. The imports rose due to more imports from refineries following the rise in domestic fuel demand. Refiners returned during July and August after the maintenance, which also supported crude oil imports.

High crude oil imports from India are bullish for crude oil (BNO) (DBO) prices. Changes in oil prices impact oil producers (VDE) (IXC) like National Iranian Oil, Denbury Resources (DNR), and Cobalt International Energy (CIE).

India’s crude oil imports

India’s crude oil imports averaged 4.4 MMbpd (million barrels per day) in the first nine months of 2017—1.8% higher than the same period in 2016. Imports averaged 4.0 MMbpd in 2016. They’re expected to rise 7.5% to 4.3 MMbpd in 2017—compared to 2016.

India’s crude oil demand

India’s crude oil demand averaged 4.4 MMbpd in 2016. It’s expected to rise 3% to 4.5 MMbpd in 2017—compared to 2016. OPEC estimates that India’s oil demand could rise 150% to 10.1 MMbpd by 2040 from ~4 MMbpd. Meanwhile, oil majors like Shell (RDS.A), Saudi Aramco, Rosneft, and BP (BP) are trying to tap India’s fuel oil markets.


High crude oil demand and imports from India could support crude oil (UCO) (USL) prices. Higher oil prices benefit oil tankers like Frontline (FRO) and Nordic American Tankers (NAT).

Higher crude oil prices could work against Mideast producers: IEA

Singapore (Platts)–24 Oct 2017 550 am EDT/950 GMT

Major Middle Eastern crude producers may not keep their exports to Asia too tight in 2018 as any substantial uptick in international oil prices would reignite strong investment in global oil projects and prompt new competition to emerge, director for energy markets and security at the International Energy Agency Keisuke Sadamori said Monday.

Any rise in global crude prices as a result of maintaining tight supplies to Asia could work against Middle Eastern producers as lower prices have been one of the main drivers of strong demand so far this year, while putting the brakes on a slew of new drilling projects around the world, Sadamori said during a group interview session on the first day of Singapore International Energy Week.

“They [big OPEC and Middle Eastern producers] cannot be too ambitious [on their oil price targets]…there’s not much [upside] room for them to hope for,” Sadamori said.

“Once the oil price goes to certain levels, this will stimulate new drilling and investments in North America,” he added.

Middle Eastern crude exports to Asia have fallen sharply over the past several months, with major Persian Gulf producers, including Abu Dhabi National Oil Co, recently slashing its allocations for November-loading crude oil by up to 15% to most of its customers.

Before that, various Asian end-users had their crude oil term allocations from Saudi Arabia slashed for September, with at least two South Korean refining companies receiving around 10% cuts in monthly contract volumes for light and medium sour grades.

More recently, Saudi Aramco fielded demand for 7.711 million b/d in November loadings but would only allocate 7.150 million b/d, the Saudi energy ministry said earlier this month, as the kingdom aims to keep the OPEC/non-OPEC production cut agreement on track in its efforts to rebalance the market.

The cuts signal Saudi Arabia and the UAE’s strong commitment to OPEC’s November 30, 2016, deal to reduce production by 486,000 b/d and 139,000 b/d, respectively, from October levels last year.

Sadamori said OPEC and non-OPEC producers’ compliance with their respective output cut targets had been positive so far, but he also pointed out that Middle Eastern producers were likely well aware of the importance of Asian market share as the region is expected to play a major role in global demand growth.

“China, India and ASEAN would continue to contribute to the additional demand [going forward] and that’s what [key Middle Eastern and OPEC producers] will be mindful of,” he said, when asked about the rising competition from North American crude producers.

North American suppliers have slowly been gaining market share in the Far East, as multiple waves of US arbitrage crude cargoes reached Asian ports so far this year, while multiple VLCC vessels carrying WTI, Midland and Eagle Ford crude are expected to arrive during late in the fourth quarter and early January, market sources have said.


International crude prices have staged a sharp rebound since hitting multi-year lows in late Q2 this year, with expectations of an extension to OPEC production cuts beyond March 2018 and recent concerns over supply disruptions in Iraq providing support, market participants said. Front-month ICE Brent crude futures contract rallied to a two-year high of $59.49/b on September 26, from a June 21 low of $44.35/b, the lowest since November 14 last year.

Accordingly, Dated Brent, also rose sharply. Dated Brent averaged $56.05/b in September, up from $51.64/b in August and the highest monthly average since July 2015 when it was $56.54/b, according to S&P Global Platts data.

However, macro-economic analysts have said oil prices could also find some support in the near term as the current environment of rising US interest rates would mean US producers would be less able to obtain favorable financing for projects.

“If US Treasury yields continue to rise (We expect 10-year Treasury yield to increase to 2.5% by the end of 2018), the financing of these investments will become more difficult,” ABN Amro senior energy economist Hans van Cleef said in a note last week.

“Therefore, it will be uncertain whether the US oil production will grow as fast as financial markets currently anticipate,” he added.

At 4:30 pm Singapore time (0830 GMT) on October 22, ICE December Brent crude futures were up 6 cents (0.1%) from Friday’s settle at $57.81/b.

–Gawoon Philip Vahn,
–Andrew Toh,
–Edited by Jonathan Dart,

Options open on OPEC oil pact


Saudi energy minister says flexible

RIYADH, Oct 24 (Reuters) – Saudi Energy Minister Khaled al-Falih said on Tuesday that there was flexibility and options were open on an OPEC-led oil output reduction agreement.

Falih, who holds the rotating presidency of OPEC, said monitoring was under way on compliance with the deal but he was satisfied and focused on everyone working together.

“We are very flexible, we are keeping our options open. We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the 5-year average,” Falih said, adding that work remains to be done.

Falih added that oil investment had returned after the OPEC-led pact to reduce supply began in January and the recovery of the global economy.

There was consensus, he said, to continue until targets were reached to balance the market but shocks to the market by reducing more than needed should be avoided.