Crude prices drop amid sustained supply glut concerns
Crude prices…U.S. oil prices dropped on Friday, as ongoing concerns over a global supply glut continued to weigh on the commodity amid growing doubts OPEC will manage to limit production.
U.S. crude futures for December delivery were down 1.39% at $44.04 a barrel, re-approaching Wednesday’s more than one-month low of $43.07 a barrel. On the ICE Futures Exchange in London, the January Brent contract tumbled 1.20% to trade at $45.28 a barrel, not far from Wednesday’s three-month trough of $44.40.
Crude prices were hit after the International Energy Agency said on Thursday that global supply rose by 800,000 barrels per day in October to 97.8 million bpd, led by record OPEC output and rising production from non-OPEC members such as Russia, Brazil, Canada and Kazakhstan.
The IEA kept its demand growth forecast for 2016 at 1.2 million bpd and expects consumption to increase at the same pace next year, having gradually slowed from a five-year peak of 1.8 million bpd in 2015.
The commodity also remained under pressure amid growing skepticism over the implementation of a planned deal by OPEC to limit production. OPEC reached an agreement to cap output to a range of 32.5 million to 33.0 million barrels per day in talks held in Algeria in late September. However, the 14-member oil group said it won’t finalize details on individual output quotas until its next official meeting in Vienna on November 30.
The possibility that producers could walk away empty-handed from the November meeting looms large after Iraq, Iran, Nigeria and Libya all signaled they might not take part in the proposed production cut deal. Russia’s unclear stance is also fueling uncertainty.
Separately, the U.S. Energy Information Administration said that crude oil inventories rose by 2.4 million barrels last week to 485.0 million, which the EIA considered to be “historically high levels for this time of year”.