Saudi Arabia, which is the largest oil producer among OPEC states, will reduce output by 322,000 barrels per day - to 10.31 mln barrels.
The price market structure for the Brent crude price has flipped to a slight backwardation after hovering in a slight contango for the past two weeks.
Currently, Saudi Arabia could raise production all the way up to its maximum capacity of 12 million barrels a day. However, buyers still remained in the market owing to weak United States dollars in broad market as Greenback continues to suffer from the impact of partial government shutdown in U.S. economy and Fed's dovish stance on rate hike policy which helped bulls retain hold above $1280 handle.
The administration added that USA crude production rose to 11.9 million barrels per day last week.
According to the outlook, growth in liquid fuels production in the USA and in other non-OPEC countries will contribute to global oil inventory growth rates of 0.2 million b/d in 2019 and 0.4 million b/d in 2020.
Oil LCOc1 rallied above $85 per barrel in the second half of 2018 on concern about lower supplies from Iran due to new US sanctions.
"Trade war concerns have reduced global growth expectations and with it comes a lower demand for energy", said Alfonso Esparza, senior analyst, OANDA. In November, waivers were announced for eight major Iranian oil importers, among them China, India, Japan, South Korea, Turkey, Taiwan, Italy, and Greece.
In its latest market report, OPEC stated: "In 2019, world oil demand is forecast to rise by 1.29 mb/d, also in line with last month's projections". Wide Canadian price spreads have played a major role in justifying rampant refinery utilization in the U.S., particularly in the mid-continent.
In the US, crude production climbed by 200,000 barrels a day last week to 11.9 million, the highest level in weekly figures compiled by the Energy Information Administration since 1983.