CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued to decline in early trade Tuesday, with oil futures plumbing new lows, while West Texas Intermediate is down for a 12th consecutive session, as concern over economic growth in 2019 and its effect on global oil demand converges with abundant supply.
The Organization of the Petroleum Exporting Countries released their monthly outlook this morning showing OPEC crude production reached a 22-month high in October, while trimming its outlook for world oil demand this year and in 2019 and lifting non-OPEC supply gains for both years.
OPEC crude production at 32.9 million barrels per day (bpd) in October, up 127,000 bpd from September, is the highest output rate by the cartel since December 2016 -- the month before the Vienna agreement that set lower country production quotas took effect in January 2017. The United Arab Emirates and Saudi Arabia led the OPEC production gains in October, with Saudi output up 127,000 bpd to 10.63 million bpd. The report also showed Libyan crude production increased for the fourth consecutive month and output held above 1.0 million bpd for a second straight month at 1.114 million bpd. Crude production in Angola continues to recover too, up a fourth consecutive month in October to a 1.533 million bpd eight-month high.
Iranian crude production declined for a sixth consecutive month, down 156,000 bpd to a 3.296 million bpd 33-month low under the weight of U.S. sanctions. The economic collapse in Venezuela and years of incompetence in its oil sector maintained the downward trend in the country's crude production, down 40,000 bpd to 1.171 million bpd, which compares with a 2017 production rate at 1.991 million bpd and at 2.154 million bpd in 2016.
Comments from Saudi Arabia over the weekend that it would cut its production by 500,000 bpd in December, and reports that OPEC is considering an output cut of at least 1.0 million bpd for 2019 were met with a tweet from U.S. President Donald Trump complaining that oil prices are still too high, and that the Saudis and OPEC should not cut production.
OPEC pointed to slowing oil demand in China and India during the third quarter that prompted a downward revision in this year's global oil consumption rate by 40,000 bpd, despite greater-than-previously expected demand for the period from the United States. OPEC dialed down its projection for 2019 world oil consumption growth by 90,000 bpd, citing concerns over the global economy and ongoing uncertainties. Annual world economic growth considered by OPEC in their outlook was revised down 0.1% to 3.5% for 2019 "on the back of a slowing dynamic amid rising trade tensions, monetary tightening, particularly in the U.S., and mounting challenges in emerging markets and developing economies."
Major U.S. equity indices mostly firmed in early trading following Monday's steep declines, while the U.S. dollar eased from Monday's 17-month high.
Nymex December WTI futures traded at an 11-month low on the spot continuous chart at $57.58 barrel (bbl) Tuesday morning, down more than $2.00. ICE January Brent futures were down about $2.25 at last look, trading near a $67.49 eight-month spot low.
Nymex December ULSD futures were down nearly 4.0 cents, edging off a $2.1087 12-week low on the spot continuous chart. Nymex December RBOB futures trimmed a decline to a $1.5835 13-month spot low, trading down 4.75 cents near $1.5895 gallon.
Brian L. Milne can be reached at firstname.lastname@example.org
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