Oil prices decline under the weight of an increase in OPEC supply and a new blow to the demand from the growing infection with the Coronavirus, causing crude to lose 8 percent in October, approaching about $ 37 a barrel.
The price of a barrel of Kuwaiti oil decreased by 97 cents to reach $ 36.86 in trading on Friday compared to $ 37.83 in trading last Thursday, according to the price announced by the Kuwait Petroleum Corporation.
OPEC oil production increased for the fourth month in October, according to the results of a Reuters survey, due to the re-operation of more Libyan facilities and the increase in Iraqi exports, which nullified the impact of the full commitment of the rest of the members to the agreement to reduce supply led by the organization.
According to the survey, the 13-member Organization of the Petroleum Exporting Countries pumped an average of 24.59 million barrels per day over the course of October, an increase of 210,000 barrels per day over September, and in a new boost from the lowest level in three decades recorded in June.
Oil prices decline under the weight of an increase in OPEC supply and a new blow to demand from the growing infection with the Coronavirus, causing crude to lose 8 percent in October, approaching about $ 37 a barrel.
Some analysts say that this is putting pressure on OPEC and its allies, in what is known as the "OPEC +" group, to postpone the increase in supply scheduled for January 2021.
"Demand for oil is not supportive at the present time at the minimum," said Stephen Brennock of BPM brokerage. "OPEC will have to extend its current production levels until the end of March."
OPEC + had cut an unprecedented 9.7 million barrels per day, equivalent to ten percent of global production, as of May, in light of the pandemic that struck demand.
Since August, the group has been pumping more quantities after it reduced the amount of the reduction to 7.7 million barrels per day, of which OPEC’s share is 4.868 million barrels per day.
A further increase of two million barrels per day is scheduled to begin in January, although Saudi Arabia and Russia favor continuing the cuts at their current levels, according to what OPEC sources say.
In October, the commitment of OPEC countries bound by the reduction agreement reached 101 percent of the reduction pledged, according to the survey, that is, unchanged from September.
Libya and Iraq
The October increase means that OPEC pumps about 2.2 million barrels per day above the June figure, which was the lowest since 1991.
Libya's production is on the rise after Khalifa Haftar, commander of eastern Libyan forces (the Libyan National Army), said on September 15 that his forces would lift their blockade of oil export facilities, which had been struck for eight months.
The survey shows that production increased by 250,000 barrels per day in October, a faster rate than some analysts and OPEC officials had expected.
The second largest increase came from Iraq, which raised exports from the southern ports. But the percentage of commitment remained about 100 percent, which is more than what Iraq achieved in previous agreements of the "OPEC +" coalition.
Saudi Arabia, the world's largest oil exporter, has kept production stable, and so has Kuwait, according to the survey.
There has been little change in Iran's supply, which is also excluded from OPEC's cuts, after an increase in September despite US sanctions. But exports fell slightly in October.
In terms of OPEC members who cut production, the biggest cut came from the UAE, which was pumping above its quota in August. Industry sources said that the reduction indicates that the UAE is still compensating for the August increase.
Supplies of Venezuela, the third OPEC member exempt from supply cuts, also declined.
The OPEC survey monitors the supply received by the market based on shipping data provided by external sources, data on Refinitiv Eikon flows, information from trackers of tankers such as Petro-Logistics and Kepler, and information from sources in oil companies, OPEC and consultants.
In global markets, oil prices fell on Friday, and suffered losses for the second month in a row, as concerns about fuel consumption expectations are simmering in light of the growing incidence of Covid-19 disease in Europe and the United States.
Brent crude fell 19 cents to settle the settlement price at $ 37.46 a barrel, after touching the lowest level in 5 months of $ 36.64 in the previous session. The Brent crude contract was expired today, and the January contract closed down 32 cents.
US West Texas Intermediate crude fell 38 cents to close at $ 35.79 a barrel, after falling to its lowest price since June, Thursday, when it hit $ 34.92.
West Texas slipped 11 percent over the month, while Brent lost 10 percent.
France and Germany have ordered new closures, as a massive second wave of Corona infections threatens to flood Europe before winter arrives.
The United States is also facing a growing number of injuries, breaking its record for the number of new cases in one day.
“Many countries of the world's largest oil consumers are experiencing hit levels that they did not see, not even in the first wave,” said Paula Rodriguez-Massieu, senior oil market analyst at Rystad Energy. It is inevitable that these infection levels will affect the demand for oil, as transportation will collapse to a minimum during the upcoming shutdowns.
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