Oil prices slide after US drillers add rigs

A girl carries her brother at a displaced persons camp near Sanaa Yemen

A girl carries her brother at a displaced persons camp near Sanaa Yemen

It's thought the Saudi crown Prince will support keeping the cap in place, as higher oil prices are required for his economic plans.

In the early trading hours last Monday, Brent reached a high of $62.44, a level last seen in July 2015, and represents a 40.8 per cent surge from June's lows.

Last month, Saudi Aramco trimmed supplies to at least three Japanese buyers and one in South Korea by up to 10 percent across different Saudi crude grades for November loading as maintenance at oil fields reduced output. This widened the price gap between Kuwaiti crude and Saudi Arab Medium by 5 cents to 50 cents a barrel.

Oil prices settled slightly lower on Wednesday after U.S. government data showed rising domestic crude production, a surprise build in U.S. stockpiles and a decline in monthly Chinese crude imports, a triple blow that was offset somewhat by rising tensions in the Middle East. Realistically, if gold can't rally while Saudi Arabia is undergoing a real-life "Game of Thrones", I'm not sure what is left to provide a tailwind.

Moreover, at higher oil prices, some OPEC producers could be tempted to cheat (even more) and the surprisingly high overall compliance, of which the cartel is so proud, could quickly fall apart.

The response from the U.S. shale industry is of great importance at the current stage.

"Demand considerations have attracted relatively little attention", Stephen Brennock at London-based broker PVM told the Financial Times at the end of October.

The voices that U.S. shale might underperform expectations could only be a bullish sign for oil prices.

Oil prices eased on Tuesday, after both U.S. crude and Brent posted solid gains in the previous session.

Traders said higher prices in recent weeks were the result of efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to tighten the market by cutting output, as well as strong demand and rising political tensions. "Our base case is that we do not get a full-year extension on Nov. 30". Oil prices are in the $60 range, which is the highest point in over two years. "The higher the price goes in the short run the more difficult it will be to return the oil taken off the market".

The University of Michigan released a report on Friday showing a bigger than expected pullback in consumer sentiment in the month of November.

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