Oil traded near a three-month high in New York as traders continued to assess last week’s change in OPEC policy.
Futures fluctuated after climbing 8.5 percent last week. Prices erased early gains as equities slipped and the dollar climbed. While OPEC outlined an accord to curb output by as much as 750,000 barrels a day, Libyan production rose and will advance further this month, according to an official of the state oil company. Rigs targeting crude in the U.S. rose a fifth consecutive week to the highest level since February, Baker Hughes Inc. said on its website Friday.
Oil capped the biggest monthly gain since April after the Organization of Petroleum Exporting Countries agreed to trim supply for the first time in eight years. While quotas will be decided at the group’s official meeting in November, Nigeria and Iran have said they are exempt and Iraq has said it doesn’t accept OPEC’s estimates of its production levels. Russia boosted output last month to a post-Soviet record.
“Stocks are off a little and the dollar is higher, which has put some downward pressure on oil,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The OPEC meeting is over and we’re waiting for what’s coming next.”
West Texas Intermediate for November delivery rose 5 cents to $48.29 a barrel at 11:38 a.m. on the New York Mercantile Exchange. Prices reached $48.87, the highest since July 5. Total volume traded was 16 percent below the 100-day average. Futures rose 7.9 percent in September.
Brent for December settlement increased 15 cents at $50.34 a barrel on the London-based ICE Futures Europe exchange, trading at a $1.47 premium to WTI for December delivery. The November contract fell 0.4 percent to expire at $49.06 on Friday.
For a story on OPEC challenges after the output agreement, click here.
Libyan oil output rose to 500,000 barrels a day and will climb to 600,000 a day by the end of October, said Ibrahim Al-Awami, head of National Oil Corp.’s oil measurement department. The country pumped 260,000 barrels a day in August, data compiled by Bloomberg show. Libya produced about 1.6 million barrels a day before the 2011 uprising that ousted longtime leader Moammar Al Qaddafi, but output has tumbled as militias vied to control energy facilities.
OPEC’s third-largest member Iran wants to increase exports to 2.35 million barrels a day in the coming months, state news agency IRNA reported. The Islamic republic is currently shipping 2.2 million a day.
Iran could boost output to 4.1 million or 4.2 million barrels a day from 3.7 million currently, yet further increases will take time, Paolo Scaroni, vice chairman of NM Rothschild & Sons Ltd. and former chief executive officer of Eni SpA, said in a Bloomberg Television interview.
Production increases from Iran, Nigeria and Libya offset lower output from Saudi Arabia last month, meaning overall OPEC production held steady, according to Vienna-based consultants JBC Energy GmbH.
“The problem with the OPEC meeting is that it didn’t provide a lot that was substantial,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $5.2 billion. “The staying power of this agreement is unknown. Past experience shows that if the Saudis are willing to cut and allow others to take market share it will work, and if they aren’t, it will fail.”
Oil-market news:
U.S. drillers added seven rigs during the week ended Sept. 30, increasing the count to 425, according to Baker Hughes. The U.S. is pumping at a rate of 8.5 million barrels a day, weekly data from the Energy Information Administration show. Russian output climbed to 11.11 million barrels a day in September, according to data from the Energy Ministry’s CDU-TEK unit. Investors increased their long position in WTI by 24,131 futures and options, or 8.1 percent, during the week ended Sept. 27, according to the Commodity Futures Trading Commission. Bets on falling prices dropped. Net-bullish positions in Brent oil fell 7 percent, or 21,924 contracts, to 290,178, according to ICE data.
Recommended for you
