Oil prices advance as Saudi to cut output

The slide also comes during signs of a softer-than-expected impact from US sanctions on Iran oil exports

Saudi energy minister Khalid al-Falih is looking to cut oil production to shore up sagging prices.

Benchmark Brent crude, which had been trading above $80 a barrel recently, now hovers just over $70 after the USA sanction waivers on Iran.

"Sky-high production in the USA, coupled with incremental barrels coming from Saudi Arabia and Russian Federation is starting to impact oil market balances".

Saudi Arabia, the world's largest exporter, will cut production by 500,000 barrels per day, AFP reported, citing energy minister Khalid al-Falih.

Khalid al-Falih´s comments follow a meeting in Abu Dhabi at the weekend, where the OPEC group and its allies had already started laying the groundwork to reduce supply in 2019, reversing an nearly year-long expansion.

There have also been signs that renewed U.S. sanctions on Iranian oil exports may have a softer-than-expected impact.

The US also hit a record-high of 11.6m bpd in November, CNBC reported.

"We're kind of back to square one: It must feel like November 2016 to them, a lot", said John Kilduff, a partner at Again Capital Management in NY, referring to the time period when OPEC and its allies agreed to initiate production cuts.

Brent futures for January settlement fell 6 cents to close at US$70.12 on the London-based ICE Futures Europe exchange.

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Meanwhile, Sultan Ahmed al-Jaber, the head of the state-run Abu Dhabi National Oil Co., said the UAE planned to increase oil production to 4 million barrels of oil a day by 2020 and 5 million barrels a day by 2030. He noted that in 2015 when OPEC lifted its output by about 2 million barrels a day, just over 2% of global demand at the time, oil prices decreased by roughly a third, while oil stocks experienced a simultaneous plunge.

The crash deeply impacted oil producers, with Saudi Arabia's fiscal deficit rising to 16% of its GDP - meaning lesser money for infrastructure, defence, and its social projects such as free medicine for citizens and so on.

Oil prices had strengthened early in the session, after Saudi Arabia said the Organization of the Petroleum Exporting Countries and its partners believed demand was softening enough to warrant an output cut of 1 million barrels per day next year.

Crude oil prices began to rise on Monday by more than 1%. "If that means trimming supply by a million [barrels per day], we will do it".

Other oil-market news Gasoline futures rose 1.5% to settle at US$1.6367 a gallon.

"Equities and oil were pretty much falling in lock-step", said Josh Graves, senior market strategist at RJO Futures in Chicago.

Oil prices have shed a fifth of their value in one month since surging to a four-year high in early October.

Malaysia agreed in December 2016 to cut its production by 20,000 barrels a day to the agreed 600 million barrels until the next meeting the Vienna meet.

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