NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled in the loss column Wednesday afternoon on technically-based selling pressure and growing concerns that leading oil producing nations may not cut production next month after all.
The Organization of Petroleum Exporting Countries' planned production cut might not happen next month after Iraq, Venezuela and Indonesia asked to be exempted, exposing disunity within the producer group.
These OPEC members are complaining about their quota allocations, which they claim are smaller than they would like. OPEC Secretary General Mohammed Barkindo said the group is facing its toughest challenge yet as members debate output cuts needed to balance the market by 2017.
OPEC wants to use secondary sources data, which put Iraq's output at 4.45 million barrels per day (bpd) in September, but Iraq wants the higher data Baghdad provided OPEC, which shows 4.77 million bpd production rate.
"There's skepticism about OPEC's plan to cut production, but I think what Iraq is doing is a negotiation ploy to get a few extra barrels, and Russia is also looking for a better deal," said analyst Phil Flynn at Price Futures. "What I think was key today is technical pressure after WTI dropped below $50 per barrel (bbl)."
Russia reportedly said it won't sign on to any deal to reduce its output if OPEC as a group doesn't agree to cut its production. The Kremlin had previously pledged to freeze its output in a coordinated effort with OPEC to rid the market of excess supply.
NYMEX December WTI crude oil futures settled 78 cents lower at $49.18 bbl, off a $48.87 three-week spot low. The December Brent futures contract on the IntercontinentalExchange settled 81 cents lower at $49.98 bbl.
NYMEX November ULSD futures fell 1.20 cents to a $1.5511 gallon settlement, and November RBOB futures finished the formal trading session down 1.74 cents at a $1.4831 gallon.
The Energy Information Administration's weekly oil supply report released midmorning was bullish showing an unexpected 553,000 bbl crude oil stock drawdown, a 2 million bbl decline in nationwide gasoline stocks and a larger-than-expected 3.4 million bbl stock draw in middle distillates for the week ended Oct. 21.
Implied demand for gasoline climbed by 320,000 bpd for the week while demand for distillates posted a 179,000 bpd increase.
George Orwel can be reached at firstname.lastname@example.org
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.