Oil Lower in Early Monday Trade
NEW YORK (DTN) -- New York Mercantile Exchange oil futures fell at the start of regular trade Monday as the likelihood for a coordinated cut in production by the Organization of the Petroleum Exporting Countries diminished following a comment over the weekend by Iraq's oil minister, as did expectations that Russia, which is not part of OPEC, would also reduce their output in coordination with the cartel.
OPEC will meet in Vienna Nov. 30 for their biannual meeting at which time the 14 members of the cartel are expected to finalize a deal to lower their production to a 32.5 to 33.0 million bpd range. Holding informal meetings in Algiers in late September OPEC agreed to a framework to cut their collective output by as much as 700,000 bpd, although continue to negotiate the framework's details, including individual member quotas.
Over the weekend, Iraqi oil minister Jabar Ali al-Luaibi said Baghdad would not reduce output, which it told OPEC stood at 4.775 million bpd in September, previously indicating it wanted to be exempt from production cuts discussed in Algiers Sept. 28.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Iraq is the second largest OPEC producer after Saudi Arabia and a collective production cut would be harder to achieve without its participation, said analysts.
According to Bloomberg News, a day after Russia's oil minister Alexander Novak met with his counterpart from Saudi Arabia in Riyadh to discuss a coordinated production cut, Russia's oil ministry this morning released a production forecast for 11.0 million bpd, up from 10.9 million bpd.
Russia's production outlook and Iraq's comments dampened market sentiment that was boosted Friday when Russia recommitted to joining OPEC in coordinating production cuts. Many market observers are now bracing for the OPEC deal to flop given members track record of not complying with the quotas.
In early regular session trading, NYMEX December West Texas Intermediate crude oil futures fell 63cts to $50.85 bbl. The December Brent futures contract on the IntercontinentalExchange was down 47cts at $51.31 bbl.
In products trade, NYMEX November ULSD futures fell 0.17cts to $1.5723 gallon. The November RBOB futures contract was 1.87cts lower at $1.5127 gallon.
On Wall Street, equities were higher while the dollar firmed to a fresh better than 8-1/2 month high on expectations the Federal Reserve would raise its federal funds rate in December.
On the domestic front, Baker Hughes Inc. on Friday (10/21) reported the number of active oil rigs increased for an eighth straight week through Oct. 21, climbing by 11 last week to 443. Active rigs are now at their highest point since early February.
The Energy Information Administration said that crude stocks fell 5.3 million bbl for the week-ended Oct. 14, with supplies at the Cushing supply hub in Oklahoma, down 1.6 million bbl to 59.7 million bbl.
George Orwel can be reached at george.orwel@dtn.com
(BAS)
Copyright 2016 DTN/The Progressive Farmer. All rights reserved.