US light, sweet crude oil prices dropped on the New York market Oct. 12 to settle just above $50/bbl after the Organization of Petroleum Exporting Countries reported OPEC’s production in September rose 220,000 b/d to 33.39 million b/d, which was the highest level since 2008.
Crude oil output increased mostly from Iraq, Nigeria, and Libya, while Saudi Arabian oil production dropped during September, OPEC said of reports from secondary sources. Saudi production for September was listed at 10.49 million b/d, down 87,500 b/d from August.
OPEC’s Monthly Oil Report estimated demand for OPEC crude in 2016 at 31.8 million b/d and at 32.6 million b/d in 2017.
In late September, the cartel met in Algeria and announced it would discuss a proposed production cut at its Nov. 30 meeting in Vienna. Prices have generally rallied since then. Oil prices closed on the New York market on Oct. 10 at $51.35/bbl, the highest front-month contract settlement since July 2015.
“There are a lot of moving pieces and skepticism around how a deal will be structured and adhered to,” said Anthony Starkey, energy analysis manager of Platts Analytics, a unit of S&P Global Platts. “One of the biggest hurdles is providing allowances for members who are producing below capacity due to extraneous circumstances…namely Iran, Nigeria, and Libya.”
Oil industry executives meeting in Istanbul for the World Energy Conference issued various statements about OPEC’s proposed production cut by as much as 700,000 b/d to a total range of 32.5-33 million b/d.
“I can say that many countries from outside OPEC are willing to join…we are not talking about support, we are talking about contribution,” Saudi Arabia’s Energy Minister Khalid al-Falih told Reuters on Oct. 12 in Istanbul.
Russian Energy Minister Alexander Novak said the base-case scenario for non-OPEC Russia would be to leave current output unchanged.
The US Energy Information Administration was scheduled to release its weekly crude and products inventory on Oct. 13, which was a day later than normal because of the Oct. 10 Columbus Day holiday for the federal government.
The natural gas contract for November declined 2.7¢ to a rounded $3.21/MMbtu. On the spot market, the Henry Hub gas price gained 3¢ to $3.17/MMbtu.
Heating oil for November fell 2¢ to a rounded $1.57/gal. The price for reformulated gasoline stock for oxygenates blending for November declined 2¢ to a rounded $1.46/gal.
The December Brent crude contract on London’s ICE fell by 60¢ to settle at $51.81/bbl, and the January contract dropped 56¢ to settle at $52.47/bbl. The November gas oil contract settled at $463.50/tonne, down $7.
The average price for OPEC’s basket of benchmark crudes on Oct. 12 was $48.69/bbl, down 12¢.
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