Oil Lower in Early Monday Trade

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were lower in early trade Monday amid concern the effect of Turkey's currency devaluation could spread across Europe and hinder economic growth and demand for oil while the Organization of the Petroleum Exporting Countries released a modestly bearish global oil supply, demand outlook Monday.

"There's some stories out there about declines in the Turkish currency and its effect on the European banking sector that could potentially affect global GDP; also some news from OPEC about lower global demand and Saudi Arabia cutting July production," said David Thompson, executive vice president of Washington, D.C.-based Powerhouse, a commodity hedge and trade advisory.

OPEC shaved 20,000 bpd from its global oil demand outlook for both 2018 and 2019 to 98.93 million barrels per day (bpd) and 100.26 million bpd, respectively. OPEC said the revisions from its July outlook were due to lower-than-previously expected demand in the second quarter from Latin America and the Middle East. In Monday's Monthly Oil Market Report, OPEC expects year-on-year growth of 1.64 million bpd in 2018 and 1.43 million bpd in 2019.

OPEC also revised higher its forecast for non-OPEC supply growth by 73,000 bpd to 59.62 million bpd for 2018 for annual growth of 2.08 million bpd on higher-than-expected oil production from China. OPEC said 2019 non-OPEC supply could grow 2.13 million bpd to 61.75 million bpd.

OPEC crude production did increase by 40,700 bpd to 32.323 million bpd in July, with output gains by Kuwait, Nigeria, and the United Arab Emirates offsetting production declines by Libya, Saudi Arabia, Iran and Venezuela.

Crude production by Saudi Arabia was estimated by secondary sources down 52,800 bpd at 10.387 million bpd in July, while the Saudis reported output down a larger 200,500 bpd to 10.288 million bpd.

Crude production in Iran fell 56,700 bpd in July to the lowest since December 2016, to 3.737 million bpd, with Venezuelan output off 47,700 bpd to a multi-decade low of 1.278 million bpd. Libyan output moved down 56,700 bpd to 664,000 bpd in July, the lowest production rate since April 2017.

In Kuwait, crude production increased 78,500 bpd to 2.791 million bpd in July, while up 69,200 bpd to 2.5959 million bpd in the UAE. Nigerian production ramped up 70,500 bpd from a 15-month low to 1.667 million bpd.

Near 9 a.m. ET, the September NYMEX WTI contract stood 24 cents lower at $67.39 bbl, while the October ICE Brent contract fell 5 cents to $72.76 bbl. September RBOB futures were down about 0.35 cents at $2.0358 gallon while the September ULSD contract was up about 0.25 cents to $2.1423 gallon.

Brian Whary can be reached at brian.whary@dtn.com