Oil climbs over 1% for first time in six week, dollar slips

Oil futures rose in American trade on track for the best performance since early October, with the dollar index off January 2017 highs, following earlier data from China, the world's largest energy importer, and the US, and after reports that OPEC is considering a 1.4 million bpd cut in output in 2019. 

As of 07:02 GMT, US crude futures due in December rose 1.40% to $56.47 a barrel, while Brent January futures rallied 1.36% to $66.36 a barrel, as the dollar index shed 0.19% to 97.12. 

Earlier Chinese data showed the unemployment rate steadied at 4.9%, same as September, while retail sales rose 8.6% y/y, slowing down from 9.2%, as industrial production rose 5.9%, slowing down as well from 6.1%. 

Chinese fixed-income investments rose 5.7%, accelerating from 5.4% and beating estimates of 5.5%. 

OPEC President and UAE energy minister Suhail Al Mazroui expressed his confidence that OPEC and its allies will work on preventing an inventory buildup next year, noting how output has surpasses expectations recently, requiring a change in strategy. 

Otherwise, Russian energy minister Alexander Novak said long-term prices should be taken into consideration when taking decisions, adding that prices are averaging $70 a barrel this year, but the market continues to be highly volatile after US sanctions on Iran last week. 

Similarly, OPEC Secretary General Muhammad Barkindo noted that current price volatility is natural as investors grow weary of OPEC's impending decisions alongside allies on output and worries about oversupplies and weaker demand. 

OPEC's monthly report 

OPEC released its monthly report on global demand and supply outlook for 219, at which it cut estimates for demand on its own oil by 250 thousand to 31.54 million bpd next year. 

Conversely, OPEC expects an increase in global supplies 2019 outside OPEC in particular, with global demand growth overall estimated to fall by 70 thousand bpd to 1.29 million bpd. 

OPEC reported its output rose 127 thousand bpd in October to 32.90 million bpd despite the drop in Iranian supplies. 

Otherwise, Saudi Arabia oil minister Khalid Al Falih said Sunday that his country plans to cut crude supplies for global markets by 500 thousand bpd in December due to lower seasonal demand. 

US President Donald Trump called on Saudi Arabia and OPEC to not cut output, believing that prices should be lower based on demand and supply foundation, which comes a week after the US reinstated sanctions on Iranian oil exports, with the Trump's administration counting back then on Saudi Arabia to fill Iran's void in the market. 

Recent reports indicated a consensus in OPEC on cutting output by a million bpd next year to maintain market balance, with Saudi Arabia taking center stage with half a million cut. 

OPEC President And UAE energy minister Suhail Al Mazroui assured the organization is capable of increasing output any time to counter any possible shortages. 

Otherwise, Russian energy minister Alexander Novak stated no decision has been taken yet on extending the deal to cut global output to next year, adding that despite US sanctions on Iran, the market remains balanced. 

Iran Sanctions 

Otherwise, as US sanctions went into effect on Iranian oil exports starting November 4, eight countries were granted waivers for 180 days, mainly China, India, South Korea, Japan, Italy, Greece, Taiwan, and Turkey, already the largest importers of Iranian oil. 

In Russia, output rose to a new record of 11.41 million bpd in October, after averaging 11.36 million bpd in September. 

US Oil Rig Count 

Baker Hughes, a US oil services company, reported an increase of 12 rigs in the rig count to a total of 886, the highest since March 2015. 

US Inflation Data 

Earlier US data showed consumer prices rose 0.3% m/m in October as expected, above September's 0.1% increase. 

Core prices, excluding food and fuel, rose 0.2% as expected as well, above September's 0.1% increase. 

On a yearly basis, prices rose 2.5% as expected, while core prices rose 2.1%, slowing down from 2.2%.