*Osama Suleiman from Vienna
Phillips Futures International Energy stressed that the Organization of Petroleum Exporting Countries (OPEC) has developed a plan of action for 2019 to meet the broad challenges in order to overcome market uncertainty and reach the stage of success in reducing the abundance of oil supply and achieve a balance of markets.
A recent report by the company - quoted by analysts – emphasized that the production cuts led by "OPEC" in coordination with its allies outside the organization beginning this year will boost confidence in the market and respond to doubts about the organization's ability to balance the fundamentals of the oil market in the current period.
The report said OPEC's output cuts were aimed at counteracting the impact of large-scale oil production by US oil producers at record levels.
The producers' alliance seeks to equate the oil market and reach a balance of supply and demand.
The report predicted a rebound in crude oil futures in the first quarter of 2019, based on expectations of price recovery in the first half of the year.
It is likely that prices will fall as investment expectations rise as market sentiment improves and optimism of a strong rebound.
In a related context, the agency " Global Platts" confirmed that the market is on its way to overcome doubts about the ability of OPEC to balance the oil market in the light of the intensive efforts of the Organization to reduce production.
A recent report by the agency pointed out that the fears of the decline in global economic growth rates kept oil prices low at the beginning of the New Year.
It noted that the slide of the Chinese economy into a deflationary area for the first time since May 2017 has fueled concerns about growth, which has quickly reflected on crude oil prices.
The report suggested that the downward trend of prices turned up again, as the outlook for the new year is positive in the light of expectations of recovery of Chinese imports of crude oil in 2019.
The report highlighted the confirmation of Algerian Energy Minister, Mustafa Gheitoni, and his confidence in the return of oil prices to between 65 and 70 dollars a barrel by next April.
He predicted that the OPEC producers' alliance would cut production further if the market did not respond to the desired recovery by the end of the target time frame.
The report pointed to the Algerian minister's saying on waiting until the end of the first quarter of 2019 to see the expected results of the new agreement to cut production.
It added that oil prices will rise before April to between $ 65 and $ 70 a barrel.
Algeria produces about 1.06 million barrels per day of crude oil, the report said.
Algeria is an active member of the Ministerial Committee on Production Control, which includes six OPEC countries and abroad, led by Saudi Arabia and Russia.
Crude oil prices began trading in the new year on the back of the impact of factors related to the fears of the global economic slowdown and the continued abundance of supplies of the US oil tight, as well as some contraction in the Chinese economy, which is the leader of the international demand system.
John Hall, director of Alfa Energy, said, "the market at the beginning of the year tends to tighten supply thanks to the entry into force of the OPEC agreement and outside by reducing the supply by about 1.2 million barrels per day, which makes the chances of price increases in the next few weeks very strong."
He explained that the share of "OPEC" from the reduction of production is about 800 thousand barrels per day.
Saudi Arabia is expected to bear the largest share of the market, and Saudi Arabia is likely to make larger voluntary cuts in line with market requirements and to help restore market balance.
For his part, Reinhold Gutierrez, director of the oil and gas sector in at Siemens Global, said to the Economist that the OPEC producers' alliance and abroad are always sending positive signals supportive of reaching a stable market on a sustainable basis.
He pointed to the lack of reluctance of producers - in principle – of extension of production cuts to cover the whole of 2019.
He said that crude oil prices are still at low levels because of the exemptions granted by the United States to eight buyers of Iranian oil.
He pointed out that these exemptions are supposed to end in next May and if not extended it will lead to tougher sanctions on Iran and to reduce supply and restore high oil prices.
For his part, Marcus Krug, senior analyst at A control for oil and gas research, said to the Economist that OPEC production cuts, combined with heavy production losses in Iran and Venezuela, could speed up the treatment of excess supply of crude oil in markets in a shorter-than-expected period.
He pointed out that many data from financial institutions confirm the difficulty of continuing US drilling activities at a high pace if the price of US crude fell below $ 40 a barrel.
He noted that many US companies have succeeded in raising efficiency and pressure costs, but still a large sector needs prices above $ 65 a barrel to maintain the prosperity of investment and continued expansion of the drilling activities.
In terms of prices, oil markets fell more than 1 per cent in the first trading session in 2019 yesterday, which was affected by the rise in US production and fears of economic slowdown this year as shrinking factory activity in China, the world's largest oil importer.
According to "Reuters", at 07:05 GMT, Brent crude for the year was $ 53.05 a barrel, down 75 cents or 1.4 percent from the last close in 2018.
West Texas Intermediate crude futures fell 58 cents, or 1.3 percent, to reach $ 44.83 a barrel.
Factory activity in December in Asia weakened by China-US trade war and the slowdown in Chinese demand, which has hurt output in most economies.
This indicated a difficult start for the world's largest economic growth zone in 2019.
Oil prices in 2018 fell for the first time since 2015.
US crude futures fell about 25 per cent year-on-year, while Brent dropped nearly 20 per cent.
In terms of production, all eyes will be on the current rise in US production and OPEC and Russia efforts to control supply.
The US Energy Information Administration said last Monday that US crude production rose to an all-time high of 11.537 million bpd in October.
This makes the United States as the world's largest oil producer superior to Russia.
It said yesterday that its oil production in December reached a record level of 11.45 million barrels per day, up from 11.37 million barrels per day in November 2018.
The OPEC basket of crude prices fell to 51.55 dollars a barrel on Friday, compared to $ 52.35 a barrel the previous day.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) yesterday said that the price of the basket, which includes the average prices of 15 tons of production by the member states of the Organization achieved the first decline after the end of the year in a series of price fluctuations dominated the basket over the last deal last year.
