Oil prices advance

Oil prices advanced yesterday after crude kingpin Saudi Arabia unveiled plans to cut output in the face of global oversupplies, and pressed other producers to follow suit. Higher crude prices failed to lift the market overall in London however, with the FTSE 100 index lower in afternoon trading. Tobacco stocks were among those that slumped, with British American Tobacco shedding 9.56 per cent to £29.93 and Imperial Tobacco losing 3.0pc on reports of a planned US ban on menthol cigarettes, which are seen as posing a greater health risk than traditional ones.

In the eurozone, the Frankfurt and Paris stock markets dropped as well, weighed down in part by lingering concerns over Italy’s high debt and ahead of Tuesday’s EU-deadline for Rome to revise its 2019 budget. In early New York trading, tech shares led stocks lower, with equity markets open but Treasury markets closed to mark Veterans Day. The euro struck a 17-month low at $1.1240 before recovering slightly, hit also by Brexit clouds which weighed on the pound as well.

“Continued uncertainty over the pathway for Brexit is providing greater downside for sterling,” noted Joshua Mahony, market analyst at IG trading group.  The European Union’s chief Brexit negotiator warned ministers from the other 27 member states on Monday that no deal has been sealed on Britain’s departure from the bloc. “Meanwhile, a Saudi... output cut for December has helped boost ailing oil prices,” Mahony said. 

Saudi Arabia’s energy minister on Monday called for a global output cut of one million barrels per day to re-balance the market, as Riyadh unveiled plans to trim its own production by 500,000 bpd from December. 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 almost year-long expansion. Oil prices have shed about one fifth of their value over the past month on oversupplies and signs of a softer-than-expected impact from US sanctions on Iranian crude exports.