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00:00We just come back from Vienna 800000 barrels coming off from OPEC 400000 from mono peak i.e. Russia. It is our consensus MBI seems to be it's not enough and Ed Morse would concur. We need more cuts. Well how is this story evolved over the past three trading days. We're going to see the countervailing force is continuing to pull on oil prices and that's going to be something like we're seeing today whereas there's a sign of stockpiles coming down which is what OPEC wants to do a peak and friends want to do with these cuts. They want to get rid of a looming glut that they see in the market and there's going to be also the push of of increasing shale coming on. So that's that new shale oil coming to the market and that's what I think the city report was getting to the fact that if OPEC is successful in bringing oil off the market and bringing up prices that's going to bring more shale onto the market. And we're going to continue having this this cycle of of cuts oversupply cuts over supply and it will likely continue to erode the OPEC market share because if you see more U.S. shale coming on next year which is the forecast then we have new demand coming on. You will see the US filling that that area and you'll see less and less room for OPEC and France so this is really the calculus that they've got to watch Madness. Yeah. Anthony I wanted to ask you exactly this. The demand side of the equation. I was reading numerous more as Swan outlook for 20 19 and one of the risks they're talking about is the potential for 20 dollar per barrel oil next year. That would be driven basically by a slowdown in emerging markets like China and India. Are we not paying enough attention to the demand side of the supply demand balance there. Well Tracy one prediction that I can give you is that you will probably get forecasts for 20 to our oil just as you'll get forecasts for hundred dollar oil. So this is going to be a lot of factors going forward this year that could really push things either way. Demand is the big one and we're really watching that the trade war the potential for escalation or de-escalation between the U.S. and China and that's going to be an impact on on how willing consumers are to spend. We're going to be watching the currencies which do affect the oil prices in consuming countries . India for example has been one country that's really been hit going forward as the rupee has has done less well against the dollar and the oil prices came up that had a compound impact for a lot of those suppliers there. And if you remember India was one of the countries that did complain to OPEC earlier in the summer when Saudi Arabia decided to continue increasing more production. One of the stories we got this morning is about Russia Russia proposing maybe 50 to 60000 barrels of a cup starting in January. There's a lovely analysis which is if you then skip over what Saudi Arabia is going to do. They've got to do 80 times. They've got to cut 80 times faster than that in January. So I mean this is it we're back to the old discussion which is about action and compliance aren't we. And that's the rub of it will society do the burden sharing and the lifting here and do it willingly. It looks like that's going to be the necessity that Saudi Arabia does a lot of the cutting. And I think that going into the OPEC meeting a lot of the members were telling Saudi Arabia that they need to do it because it was the Saudis that increased production vastly from June when the constraints came off getting to a record in November of over 11 million barrels a day. What they've pledged to do is to get back down to just a little bit over 10 million barrels a day . So they're looking at taking a million barrels off the market from that record production to when the cuts come in. The Russians were more slow in taking oil off the market. The last time the cuts came around but they did do it. We're looking at a much shorter window now six months for these cuts. So we would need some more action more quickly to to impact prices .

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Oil Extends Gains on Stockpile Optimism

Oil is extending its gains in this morning's session. This comes as the U.S. industry report signals a bigger than expected draw in nationwide crude inventories as trade tensions between the U.S. and China ease. Prices also buoyed as Russia explains how it will cut production. Bloomberg's Anthony DiPaola reports on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)

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