Oil Trades Near $50 as Europe Economic Data Counters Iraq Demand
Oil traded near $50 as better-than-expected economic data in Europe countered Iraq’s demand that OPEC should exempt it from planned output cuts.
Prices rose as much as 0.3 percent in New York. A Purchasing Managers’ Index for manufacturing and services in the euro zone rose to 53.7 in October, the fastest pace since the beginning of this year, IHS Markit said on Monday. Iraq should be exemptedfrom trimming production because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said Sunday in Baghdad. Rigs targeting crude in the U.S. rose for an eighth week, according to Baker Hughes Inc.
The European economy is supporting oil amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement an accord to reduce output when they gather at an official meeting in November. A committee will meet later this month to try to resolve differences over how much individual members should pump. Drillers in the U.S. are returning rigs to shale areas as rising oil prices over the past month make it feasible for them to raise output.
“Stronger than expected macro-economic data from the euro zone presents some light for oil in an otherwise clouded market,” said Jens Naervig Pedersen, a Copenhagen-based analyst at Danske Bank A/S. “Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilize the oil market succeeding. At the same time, the oil rig count indicates that U.S. shale producers are slowly returning, making OPEC’s life even more difficult.”
West Texas Intermediate for December delivery gained as much as 13 cents to $50.98 a barrel on the New York Mercantile Exchange, and was at $50.91 at 9:29 a.m. in London. Total volume traded was about 32 percent below the 100-day average.
Brent for December settlement gained as much as 23 cents, or 0.4 percent, to $52.01 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $1.01 to WTI.
Iraq disputes OPEC figures that peg the nation’s output at less than 4.2 million barrels daily, Al-Luaibi said. The country currently produces more than the 4.7 million barrels a day it pumped in September, he said. Iran, Nigeria and Libya are the only nations currently exempt from the proposed production cuts.
The PMI for manufacturing and services in Germany rose to 55.1 in October from 52.8 a month earlier, IHS Markit said on Monday. That’s the highest level in three months and above the 50 mark that divides expansion from contraction.
- Iran is hoping Russia will cooperate with OPEC on measures to help balance the market, Iranian Oil Minister Bijan Namdar Zanganeh said in Tehran.
- Russia is still in talks with OPEC about oil production, and “many scenarios” are being discussed, Russia’s Energy Minister Alexander Novak told reporters after meeting with his counterparts in Riyadh.
- Iran to “go along’ with OPEC goal of balancing oil market, state IRNA news agency reports, citing Deputy Oil Minister Amir Hossein Zamaninia, who expects fair oil price of $55 to $60 a barrel to be achieved by 2017.
- Iraq’s South Oil Co., which produces most of the country’s crude, expects output to average 3.2 million barrels a day in 2017 compared with 3.172 million this year.
- Libyan oil output will rise to 600,000 barrels a day “soon,” Prime Minister Fayez al-Sarraj says in interview on state TV, and may pump as much as 900,000 barrels if Sharara, El Feel oil fields reopen
- China’s imports of crude oil from Russia fell to 3.96 million tons, 2.1 percent lower than a year earlier, according to data released Monday by the General Administration of Customs.