OPEC boosts oil supply most in three years Amid Bear market move
B YBloomberg
OPEC increased oil production by the most in almost three years as prices headed toward a bear market. The group, which accounts for 40 percent of world oil supply, predicted demand will accelerate in the next few months.
The Organization of Petroleum Exporting Countries increased output by 402,000 in September to 30.47 million barrels a day. It was the biggest monthly gain since November 2011 and the largest production in more than a year, its data show. Saudi Arabia, the world's largest exporter, told OPEC it boosted oil output.
Brent futures, the international benchmark, traded at a four-year low today amid speculation that Saudi Arabia, OPEC's biggest member, will refrain from supply cuts needed to drain a global oil surplus. Crude production is mounting in the U.S., Russia and Libya, while the pace of demand growth is lower as the economy slows in China, the world's second-largest oil consumer.
"Production from Libya, Iraq, Angola and Nigeria increased," OPEC's Vienna-based secretariat said. "The recovery in gasoil consumption for industry and transportation use, along with emerging winter demand" will support the market in coming months.
The organization kept unchanged annual forecasts for global oil demand, and the amount of crude OPEC will need to provide, for this year and next.
Production Levels
Libya bolstered supplies by 250,600 barrels a day to 787,000 and Iraq added 134,500 to 3.164 million, according to secondary sources cited by the report. That more than compensated for an estimated drop of 50,400 barrels a day in Saudi output to 9.605 million.
Saudi Arabia's own communications to the group showed an increase of 107,100 barrels a day to 9.704 million in September, separate data in the report showed. Price cuts announced last week by the Gulf producer fueled speculation it may let oil fall rather than cut production and cede market share.
Brent for November settlement slid to $88.11 a barrel on the London-based ICE Futures Europe exchange today, the lowest in almost four years. West Texas Intermediate, the U.S. benchmark, dropped to $83.33 a barrel on the New York Mercantile Exchange, the least since July 3, 2012. Both grades have fallen more than 20 percent from their June peaks, meeting a common definition of a bear market.
The 12-member group will probably seek to support prices by announcing a cut to either their output or formal production target of 30 million barrels a day at a meeting in Vienna on Nov. 27, said 11 of 20 analysts surveyed by Bloomberg News yesterday. Estimates ranged from a reduction of 500,000 to 1 million barrels a day.
"OPEC will have to come up with something otherwise the market will view it as a free invitation to carry on selling," Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail today. "It's a fight for market share out there at the moment," said Hansen, who hadn't seen OPEC's report.