Oil Futures Down as OPEC Output Set to Rise on Libya Restart

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- In early trading during the first session of the fourth quarter, nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved lover after private surveys showed crude supplies from the Organization of the Petroleum Exporting Countries rose for the third straight month in September as Libya and Iran, two members exempt from the 7.7 million barrels per day (bpd) agreement, are seen ramping up production in the final months of the year.

A Reuters survey found the 13-member cartel pumped 24.38 million bpd in September, up 160,000 bpd from August's revised figure, with most of the increase coming from the two members that have seen their output plunge to a fraction of their overall capacity. The development further complicates OPEC's efforts to rebalance the market that is still grappling with a pandemic-induced demand collapse.

In Libya, National Oil Corp. have lifted force majeure orders at three out of their seven Eastern ports, Zueitinia, Hariga and Brega, as the company seeks to double production this month to 260,000 bpd, according to a company statement. Bloomberg reported the Suezmax tanker Delta Hellas reached Libya Wednesday set to load 1 million barrels (bbl) of crude from storage, enabling production at the Sarir and Messla oil fields to resume immediately. Crude storage tanks at Libyan export terminals can hold 24.4 million bbl. JP Morgan and Goldman Sacks forecast the north African nation could increase crude production to 500,000 bpd by end year.

Surprisingly, the survey also found Iranian production has risen by 120,000 bpd in September as exports increased in defiance of U.S. sanctions. Iran could quickly ramp up production and lift exports to 1.8 million bpd should sanctions be lifted under a potential Joe Biden presidency who has campaigned on the promise to restore the Obama-era Joint Comprehensive Plan of Action that U.S. President Donald Trump pulled out of.

On the economic data front, traders await weekly U.S. jobless claims data due out at 8:30 a.m. ET, with consensus calling for initial unemployment applications for the week ended Sept. 26 to slow to 850,000 from 870,000 in the week prior. This week's jobless report will precede the non-farm payroll report for September, which is expected to show job growth fell below 1 million at 900,000 new jobs created after August's 1.37 million figure.

U.S. Dollar Index continued lower to trade near 93.610 in early Thursday after lawmakers signaled potential compromise on a coronavirus relief bill. House Democrats postponed a vote on a $2.2 trillion coronavirus plan after the Trump administration proposed a new stimulus package worth more than $1.5 trillion.

Near 7:30 a.m. ET, November West Texas Intermediate futures fell 56 cents to trade near $39.65 bbl, with the new front-month December Brent contract trading at $41.65 bbl. NYMEX November ULSD futures retreated 1.15 cents to $1.1407 gallon and November RBOB futures dipped 0.72 cents to near $1.1745 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges