Crude Oil Prices Drop 1% as OPEC Output Surges

US West Texas Intermediate (WTI) futures crude closed down 61 cents or 1.2 percent, to $50.18 per barrel.

Brent futures crude was down 56 cents, or 1.1 percent, at $51.85 a barrel at 2:38 p.m. (1838 GMT).

OPEC's latest monthly report, released on Wednesday, showed an increase in its September oil production to the highest in at least eight years and a rise in its forecast for 2017 non-OPEC supply growth.

The group produced 33.39 million barrels per day (bpd) last month, up 220,000 bpd from August, and as much as 890,000 bpd above the new supply target.

The dollar index climbed to a seven-month peak, also weakening demand for greenback-denominated crude among holders of euros and other currencies, traders said.

Officials from some of the world's biggest oil trading companies told the Reuters Commodities Summit in London that crude was unlikely to achieve supply-demand balance until well into 2017.

“I don't think they (OPEC) can make any substantial cuts. There are too many uncertain factors involved,” said Gunvor Group's Chief Executive Officer Torbjorn Tornqvist, adding that increasing Nigerian and Libyan output was enough to “wipe out any other deal that has been agreed on. “

Marco Dunand, CEO of Mercuria Energy Group Ltd, said prices could fall to the low $40s if OPEC failed to agree on a cut at the November meeting.

Doubts remain as to the intentions of major suppliers such as Saudi Arabia and Iran and the effectiveness of any agreement to rein in output from record highs.

The prospect of countries from OPEC and non-OPEC members such as Russia coordinating a production curb will support prices above the $50 mark, market participants have said since an initial agreement was struck at the end of last month.

Government officials from major oil producers, including Russia, are meeting in Istanbul this week to try to lay out further details of production cuts ahead of an official OPEC meeting in November.

Still, analysts cautioned that an agreement may fall through, particularly as Russia's participation remained uncertain, such as timing being critical for Russia to provide non-OPEC support to reblanace the oil market, as September was, momentarily, at unprecedented production levels. The production reference (month) could require (Russian state oil producer) Rosneft to curb its current drilling program, which goes against the interests of its private shareholders,” he said.

The latest American Petroleum Institute (API) data recorded an inventory build of 2.7 million barrels. This build followed a 7.6 million draw the previous week and expectations of a small build in the latest data.

Analyst Vibiz Research Center predicts that crude prices may weaken further due to concerns of a global surplus after reports of increased OPEC production and the API report of increased US stockpiles. The price of crude is expected to trade in the Support range of $49.70-$49.20, while if prices rise, they will trade within the Resistance range of $50.70-$51.20.

Editor : Asido Situmorang
http://vibizmedia.com/2016/10/13/harga-minyak-mentah-merosot-1-persen-tergerus-peningkatan-produksi-opec/