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Oil Turns Higher After OPEC Reports Output Turned Lower

Oil Turns Higher After OPEC Reports Output Turned Lower

OPEC's secretary-general Mohammad Barkindo said on Monday the supply cut deal was expected to help the global oil market rebalance and strong demand could further reduce oil inventories.

Brent crude oil futures for November delivery LCOc1 were down 66 cents at $53.12 a barrel while benchmark U.S. West Texas Intermediate crude CLc1 declined by 33 cents to $47.15.

Irma crashed into Florida on Sunday, leaving more than 7.4 million homes and businesses without power, but has since been downgraded to a tropical storm.

The dollar has maintained a solid tone in currency markets and the firmer USA currency has had some impact in curbing support for oil prices.

Production by the 14 members of the Organization of the Petroleum Exporting Countries came to 32.755 millions of barrels per day (bpd) last month after 32.834 in July, it said in a report, citing secondary sources.

The goal of the deal, which was extended in May, was to drain a global oversupply that has kept prices depressed. Mark Zandi, the chief economist at Moody's Analytics, said the USA economy could suffer lost revenue from the storms and the estimate for third-quarter gross domestic product could drop a half point to 2.5 percent as a result.

Crude prices are down 8.6% in the a year ago.

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"It is clear that the rebalancing process is under way", he said.

An extension of that duration would be needed under the worst-case scenario for the oil market that Opec ministers are now contemplating, the people said, asking not to be named because the talks were private.

At the same time, prices have stubbornly stayed around US$50 a barrel after the initial spike, in large part thanks to growing output from the two exempted OPEC members, Nigeria and Libya.

Four of the world's top oil producers agreed to keep all options "on the table" in order to ensure stability in the oil market, including the possibility of prolonging the output cuts that were already in force, beyond their expected end-date of March 2018.

Moreover, OPEC may also place "stricter requirements" on Iran's oil production, said Commerzbank analysts in a recent report.

Data from industry group the American Petroleum Institute (API) was due later on Tuesday while the U.S. Department of Energy's Energy Information Administration (EIA) will release its numbers on Wednesday (9/13).


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