Saudi Arabia works on convincing Russian Federation to join oil cuts

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The Organisation of the Petroleum Exporting Countries (OPEC) is expected to agree to cut oil production at a meeting aimed at supporting oil prices.

The slide in U.S. oil followed a tumble in global stock markets on Tuesday and Wednesday, with investors anxious about the threat of a widespread economic slowdown.

President Donald Trump urged OPEC nations not to cut oil production ahead of a meeting of the cartel to consider a reduction in output.

Major producers such as Russia, Saudi Arabia, Iraq, the UAE and Kuwait pounced on the occasion to produce as much oil as they could, anticipating a steep drop in Iran's exports which did not happen.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said USA crude inventories rose by 5.4 million barrels in the week to Nov 30, to 448 million barrels, in a sign that U.S. oil markets are in a growing glut.

Ministers from the core OPEC group, which doesn't include Russian Federation, will meet on Thursday to seek a consensus on exactly who will cut and by how much.

Oil prices skid amid global stock market slump, swelling US supply
OPEC members expected to agree oil production cut

"A massive liquidation in long positions by money managers has dampened market confidence on oil prices considerably", said Benjamin Lu of Singaporean brokerage Phillip Futures. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

Oil prices have crashed by nearly a third since October to around $60 per barrel as Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports.

"Hopefully OPEC will be keeping oil flows as is, not restricted", he wrote on Twitter on Wednesday. "The World does not want to see, or need, higher oil prices!" said Trump, who has in the past repeatedly accused the cartel of keeping prices artificially high. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

One issue that might complicate relations between the United States and OPEC is the murder of Saudi Arabian journalist Jamal Khashoggi by people linked to the government in Riyadh.

Iran hopes to be exempted from the cuts to keep its economy afloat, as the country faces harsh economic sanctions imposed by the US.

This story has been published from a wire agency feed without modifications to the text.

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