OPEC increased oil production by the most in almost three years as prices headed toward a bear market. The group, which accounts for 40 percent of world oil supply, predicted demand will accelerate in the next few months.
The Organization of Petroleum Exporting Countries increased output by 402,000 bbl in September to 30.47 MMbopd. It was the biggest monthly gain since November 2011 and the largest production in more than a year, its data show. Saudi Arabia, the world’s largest exporter, told OPEC it boosted oil output.
Brent futures, the international benchmark, traded at a four-year low amid speculation that Saudi Arabia, OPEC’s biggest member, will refrain from supply cuts needed to drain a global oil surplus. Crude production is mounting in the US, Russia and Libya, while the pace of demand growth is lower as the economy slows in China, the world’s second-largest oil consumer.
“Production from Libya, Iraq, Angola and Nigeria increased,” OPEC’s Vienna-based secretariat said. “The recovery in gasoil consumption for industry and transportation use, along with emerging winter demand” will support the market in coming months.
The organization kept unchanged annual forecasts for global oil demand, and the amount of crude OPEC will need to provide, for this year and next.
Libya bolstered supplies by 250,600 bopd to 787,000 and Iraq added 134,500 to 3.164 million. That more than compensated for an estimated drop of 50,400 bopd in Saudi output to 9.605 million.
Saudi Arabia said it had boosted its oil production by 100,000 barrels per day in September, raising doubts the world’s top exporter would be prepared to take unilateral action to cut in the near future.
Oil output has also risen in OPEC members Iraq and Libya, the group said in its monthly oil market report, despite violence and instability in both countries. Total OPEC output rose by 400,000 bpd to 30.47 million bpd in September.
Brent for November settlement slid to $88.11/bbl on the London-based ICE Futures Europe exchange, the lowest in almost four years. West Texas Intermediate, the U.S. benchmark, dropped to $83.33/bbl on the New York Mercantile Exchange, the least since July 3, 2012. Both grades have fallen more than 20% from their June peaks, meeting a common definition of a bear market.
The 12-member group will probably seek to support prices by announcing a cut to either their output or formal production target of 30 MMbopd at a meeting in Vienna later this year.
