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OPEC looks to cut oil production to support falling price

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  • VIENNA — OPEC countries were gathered Thursday to find a way to support the falling price of oil, with analysts predicting the cartel and some key allies, like Russia, would agree to cut production by at least 1 million barrels per day.

    Crude prices have been falling since October because major producers — including the U.S. — are pumping oil at high rates and due to fears that weaker economic growth could dampen energy demand. The price of both benchmark U.S. crude and the standard for internationally traded oil fell 22 per cent in November.

    The oil minister of Saudi Arabia, the heavyweight within OPEC, said Thursday that the country was in favour of a cut.

    “I think a million (barrels a day) will be adequate personally,” Khalid Al-Falih said upon arriving to the meeting in Vienna. That, he said, would include production for both OPEC countries as well as non-OPEC countries, like Russia, which have in recent years been co-ordinating their production limits with the cartel.

    That view was echoed by others, including the oil ministers of Nigeria and Iraq.

    “I am optimistic that the agreement will stabilize the market, will stop the slide in the price (of oil),” said Iraq’s Thamir Ghadhban.

    Investors did not seem convinced, however, and were pushing the price of oil down sharply again on Thursday, partly due to broader concerns that a trade war between the U.S. and China could escalate and hurt global growth. The international benchmark for crude, Brent, was down $1.52 at $60.04 a barrel.

    The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing.

    U.S. President Donald Trump has been putting pressure publicly on OPEC to not cut production. He tweeted Wednesday that “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”

    While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump’s decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi. U.S. Senators say, after a briefing with intelligence services, that they are convinced that Saudi’s de-facto ruler, Crown Prince Mohammed bin Salman , was involved in Khashoggi’s death. Some experts say that gives the U.S. some leverage over the Saudis, though Al-Falih denied that on Thursday.

    When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: “I don’t need permission from any foreign governments.”

    Experts say this week’s meeting of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months. How strongly it does so could depend on Russia’s contribution, which will be determined in a meeting on Friday.

    Analysts at Commerzbank estimate that if Russia is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day. This “would be enough to rebalance the oil market next year,” they wrote in a note to investors.

    OPEC’s reliance on non-members like Russia highlights the cartel’s waning influence in oil markets, which it had dominated for decades. The OPEC-Russia alliance was made necessary to compete with the United States’ vastly increased production of oil in recent years, particularly since 2016. By some estimates, the U.S. this year became the world’s top crude producer.

    OPEC is also riven by internal conflict, especially between regional rivals Saudi Arabia and Iran. One of the key questions in Thursday’s talks is whether to exempt Iran from having to cut production, as its energy industry is already hobbled by U.S. sanctions on its crude exports.

    Meanwhile, Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.

    ___

    David Rising and Geir Moulson in Berlin and Anthony Mills in Vienna contributed to this report. Piovano reported from London.

    Kiyoko Metzler And Carlo Piovano, The Associated Press






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    ‘We take action:’ Alberta investing $3.7B to move oil by rail, leasing cars

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  • EDMONTON — The Alberta government says it’s investing $3.7 billion to move the province’s land-locked oil to market by rail.

    It says 4,400 leased railway cars will move up to 120,000 barrels of oil per day by 2020.

    Shipments are expected to begin as early as July.

    “Pipelines will always be the best, most efficient, most economical long-term solution,” Notley told a news conference Tuesday.

    “We must take action today to provide more relief to our energy workers and the families who rely on these good jobs across this province and this country.

    She says her government has been studying the plan since November and is ready to move forward.

    “Albertans don’t just stand by. We take action.”

    The province estimates the plan will lead to a $5.9-billion increase in royalties, tax revenues and profits over three years, meaning a net gain of $2.2 billion.

    It expects the discount for Western Canadian heavy oil versus U.S. light crude will shrink by US$4 a barrel.  

    The rail investment is meant to be a medium-term measure as new pipelines to coastal ports, such as the Trans Mountain expansion to the West Coast, remain in limbo.

    The Canadian Press


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    Canadian retaliation to U.S. metal tariffs causing pain: ambassador

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  • OTTAWA — Canada’s ambassador to the United States says he’s hearing complaints from some Americans about the pain caused by Ottawa’s retaliation against the Trump administration’s steel and aluminum tariffs.

    David MacNaughton was referring to Canada’s imposition of $16.6 billion in retaliatory tariffs on American imports last year after President Donald Trump used a section of U.S. trade law to impose tariffs of 25 per cent on Canadian steel and 10 per cent on aluminum.

    The Canadian “countermeasures” hit products in U.S. states where Trump prevailed to win the presidency in 2016.

    They targeted a wide range of goods, including ketchup from Pennsylvania, bourbon from Kentucky, orange juice from Florida, toilet paper from Wisconsin and Ohio and panels for circuit breakers and fuses from Michigan.

    Mexico was also hit with the American tariffs and MacNaughton says the “strategic retaliation” the two countries have responded with is causing anxiety in some “important” states.

    MacNaughton told the Canadian Global Affairs Institute in Ottawa that the government is pushing hard to have the tariffs lifted.

    The Canadian Press


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