- Output cuts ‘not an option for us’: IFX cites Russian envoy
- U.S. stockpiles probably rose by 2 million barrels: survey
Crude fell to a one-week low as speculation mounts that Russia won’t join OPEC to curb supply and analysts predict U.S. stockpiles climbed.
Futures dropped 1.1 percent in New York. Output cuts aren’t “an option for us,” said Russia’s envoy at OPEC, Vladimir Voronkov, according to Interfax. The producer group has wanted Russia to join it in curbing shipments to support prices. U.S. crude supplies probably rose 2 million barrels last week, a Bloomberg survey showed before Energy Information Administration data Wednesday. Oil came off its lows as the dollar retreated against its peers.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement an accord to cut output when its members gather in November. A committee will meet this week to try to resolve differences over how much individual members should pump. Last month’s OPEC deal pushed prices higher, bringing some drilling back in the U.S., which has in turn prevented crude from making new highs.
“The nonsense around the production agreement comes in and out of the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It’s coming out of oil today because of the Russian statements, which come after Iraq made it clear that they weren’t going to make a cut.”
West Texas Intermediate for December delivery slipped 56 cents to settle at $49.96 a barrel on the New York Mercantile Exchange. It’s the lowest close since Oct. 17. Total volume traded was 15 percent below the 100-day average.
Brent for December settlement dropped 67 cents, or 1.3 percent, to $50.79 a barrel on the London-based ICE Futures Europe exchange. It’s the lowest close since Sept. 30. The global benchmark ended the session at an 83-cent premium to WTI.
U.S. crude supplies dropped to 468.7 million barrels in the week ended Oct. 14, the lowest since January, according to EIA data. Inventories have declined in six of the past seven weekly reports.
“The most important dynamic that’s been a surprise is the drop in U.S. supplies,” said Jay Hatfield, the New York-based portfolio manager of the InfraCap MLP ETF with $120-million in assets. “The OPEC agreement brought the rally forward by a few months. It was going to happen early next year because of supply and demand.”
Saudi Arabia faces the prospect of much deeper -- and financially painful -- oil production cuts after Iraq joined the queue of group members seeking immunity from the deal hatched in Algiers. Iraq is the fourth OPEC member -- after Iran, Nigeria and Libya -- to seek an exemption. Iraq shouldn’t have to take part because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said Sunday in Baghdad.
“The idea that they will come together and form a coalition to make cuts is mind-boggling,” said Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania.
Iraq could accept a decision to freeze output based on an “actual” production level of more than 4.7 million barrels a day rather than the lower figure OPEC uses from secondary sources, Oil Ministry spokesman Asim Jihad said Tuesday. The organization pegs Iraqi production at less than 4.2 million barrels a day.
OPEC Secretary-General Mohammed Barkindo said the 14-nation group is facing its toughest challenge after meeting Al-Luaibi for talks in Baghdad Tuesday. The organization is also trying to woo non-OPEC producers to join in the cuts.
So far this month, Libya and Nigeria have managed to increase their daily output by 220,000 barrels and 300,000 barrels respectively. Iran has steadily increased production since sanctions were lifted at the start of the year. Tehran has repeated it aims to ramp up its output to around 4 million barrels day from around 3.7 million a day estimated by OPEC for September.
“OPEC is not a well-oiled machine when it comes to implementing cuts,” Hatfield said. “Their credibility is low and they’re deeply divided politically.”
- Nigerian militants have attacked Chevron Corp.’s Escravos pipeline, Niger Delta Avengers spokesman Mudoch Agbinibo said in a Twitter post. Chevron’s Houston-based spokeswoman Isabel Ordonez declined to comment.
- A key pipeline capable of carrying 400,000 barrels a day of crude to the Texas Gulf Coast from the largest U.S. storage hub at Cushing, Oklahoma, was shut after a spill late Sunday.