Crude oil futures settled lower on Tuesday but remained above the crucial $50 benchmark as a report of OPEC’s record production in September reflected a retreat in the market, according to Bloomberg MarketWatch.
November West Texas Intermediate crude fell 56 cents, or 1.1%, to settle at $50.79 a barrel on the New York Mercantile Exchange.
On the London ICE Futures Exchange, December Brent crude, the global benchmark, lost 73 cents, or 1.4%, to end trading at $52.41 a barrel.
On Monday, prices were buoyed by news that Russia would go along with an OPEC proposal to reduce crude oil output.
On Tuesday, the Paris-based International Energy Agency said OPEC boosted its output by 160,000 barrels a day to a record 33.64 million barrels a day in September. At a meeting in Algiers last month, OPEC agreed to bring its output down to a maximum of 33 million barrels a day but also said it would work out details of the tentative proposal at the next OPEC meeting in Vienna on November 30.
“OPEC’s compliance with output quotas has usually been poor and Russia may not prove to be a reliable partner,” said analysts at Capital Economics, in a note issued Tuesday. “In the meantime, the recovery in oil prices is already encouraging a revival in drilling activity in the U.S.”
The IEA report also said that global oil supply hit 97.2 million barrels a day in September, up 600,000 barrels a day compared with August. The majority of the rise came from Russia which output rose by 400,000 barrels a day to a high of 11.1 million barrels a day.
The IEA report comes a day after Russian President Vladimir Putin told a conference in Istanbul that his country was prepared to freeze or cut production to help stabilize oil markets. Higher production was to be expected from all of the major producers who have agreed to participate in production cuts including OPEC members.
With prices for Brent and WTI still over $50 a barrel, the pressure is mounting for OPEC to deliver on its pledge to cut production.
The American Petroleum Institute releases its weekly U.S. petroleum inventory data Wednesday, ahead of Thursday’s official data from the Energy Information Administration. The reports will come a day later than usual because of Monday’s Columbus Day holiday for the U.S. government. Analysts polled by S&P Global Platts forecast a rise of 250,000 barrels for crude stockpiles.
The reports will no longer include crude oil lease stocks in the total commercial crude oil inventory data.
Meanwhile, November natural gas shed 3.8 cents, or 1.2%, to settle at $3.237 per million British thermal units on the New York Mercantile Exchange.