Oil steady near multi-month lows on OPEC output record, US rig count
TOKYO – Oil prices were little changed on Monday near multi-month lows, dragged down by worries about oversupply as OPEC saw record output last month and as the US rig count rose again.
London Brent crude for January delivery was trading down 3 cents at $44.72 a barrel by 0336 GMT, after settling down $1.09 on Friday. The benchmark on Friday hit its lowest since Aug. 11 at $44.19.
NYMEX crude for December delivery was down 8 cents at $43.33 a barrel. The contract closed down $1.25 on Friday after dropping as low as $43.03, its weakest since Sept. 20.
Oil has been under pressure since before the Organization of the Petroleum Exporting Countries (OPEC) said on Friday that its output rose to a record 33.64 million barrels per day (bpd) in October, up 240,000 bpd from the previous month.
OPEC plans to cut or freeze output, but investors are skeptical such a deal will be reached during the cartel’s Nov. 30 meeting and are concerned that whatever agreement reached would not be effective.
BMI Research said in a note that the most likely scenario at the OPEC meeting will be no deal, as the election victory of Republican President-elect Donald Trump – a strong advocate of US energy independence – has altered its expectations.
Any agreement to cut output and support prices would now be seen by some OPEC members as a victory for US shale producers, BMI said.
Still, Saudi Energy Minister Khalid al-Falih has said it was imperative for OPEC members to reach a consensus on activating a deal made in September in Algiers to cut oil production, according to Algeria’s state news agency on Sunday.
Iran opened three oilfields with a total production of more than 220,000 bpd on Sunday, as the country continues to ramp up its production after the lifting of sanctions.
Adding to bearish sentiment was Baker Hughes data showing active US drilling rigs rose by two to 452 in the week to Nov. 11, an increase in 21 out of the last 24 weeks.
Bolstering the market against further decline, China’s October’s crude oil output fell 11.3 percent from a year ago to 3.78 million bpd, while October crude oil runs rose 5.5 percent on year to 11.08 million bpd, highest since at least 2011, data from the statistics bureau showed.
Also, state-run oil company Petrobras’ production of oil and natural gas in Brazil fell 2.5 percent from a record high in September to 2.68 million barrels of oil equivalent per day in October due to maintenance stoppages, it said. -Reuters