Oil prices fall as OPEC crude output gains seen putting accord at risk
- Apple is said to negotiate buying cobalt direct from miners
- Capillary Technologies raises $20 million from Warburg Pincus, others
- If YSR was alive, he wouldn’t let Jagan leave Congress, says K.V.P. Ramchandra Rao
- UP investors summit LIVE: Narendra Modi’s 4-P mantra for progress
- Supreme Court allows Centre to withdraw force from Darjeeling
Oil dropped on rising OPEC output after a volatile week driven by speculation over the producer group’s intentions and the surprise election of Donald Trump.
Futures fell as much as 2.6% on Friday. Iran and Iraq, which want exemptions from an Organization of Petroleum Exporting Countries accord to cut production, told the group they raised output last month, while Saudi Arabia pumped near record levels. Oil has dropped about 15% from its October high on growing doubts that OPEC could finalize the Algiers accord at its 30 November summit amid a refusal to cut output from almost a third of its members.
“Oil is falling today because of OPEC’s self-inflicted wounds,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “OPEC members are confessing to large increases in production that might make achieving their Algiers deal an impossibility.”
The International Energy Agency, the Paris-based adviser to some of the world’s biggest economies, said it’s waiting to see whether president-elect Trump’s rhetoric on Iran hardens into action before revising its market forecasts. While investors took comfort from Trump’s conciliatory acceptance speech on Wednesday, rising US crude supplies served as a reminder of the inventory overhang.
West Texas Intermediate for December delivery dropped $1.03, or 2.3%, to $43.63 a barrel at 10:36 am on the New York Mercantile Exchange. The contract is down 1% this week. Total volume traded was about 19% above the 100-day average.
Brent for January settlement fell 99 cents, or 2.2%, to $44.85 a barrel on the London-based ICE Futures Europe exchange. Prices are 1.6% lower this week. The global benchmark traded at a 53-cent premium to January WTI.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose to the highest since March. A stronger US currency usually reduces the appeal of dollar-denominated raw materials as an investment.
Iran, freed from curbs on its oil trade in January, said it increased output by 210,000 barrels a day to 3.92 million a day in October from the previous month, according to a monthly report from OPEC. Secondary sources showed a more modest addition of 27,500 barrels a day for October.
The report was updated later on Friday to include a submission from Iraq, which didn’t initially provide an output level. Iraq told the organization that it produced 4.776 million barrels a day in October, 215,000 barrels a day more than OPEC’s own estimate.
OPEC, led by Saudi Arabia, decided in November 2014 against curtailing production to support oil prices and instead pump at capacity to increase market share. This drove crude to a 12-year low in January this year and pushed high-cost U.S. production down. Following more than two years of low prices, OPEC reversed its policy in September, saying it would cut production for the first time in eight years.
“In this year of outlier outcomes it’s not out of the question that the Saudis will decide to change course and pump all they can since everyone else is,” Kilduff said. Bloomberg
Grant Smith also contributed to this story.