Oil Prices Sink to Lowest Level in 2 Years
A report Thursday that two key OPEC producers’ September crude output jumped by a combined 450,000 barrels a day helped to send oil prices to their lowest closing level in two years, with the key U.S. grade slipping below the $14 barrier.
OPEC Listener, published by New York-based Energy Information Investments Ltd., said the Organization of Petroleum Exporting Countries’ total September production climbed to 20.64 million barrels a day.
“And with no sign of a letup, the specter of 21 million barrels a day is not out of the question for October,” OPEC Listener said.
On the New York Mercantile Exchange, the November contract for West Texas Intermediate, the benchmark U.S. crude, settled at $13.92 a barrel, 19 cents below Wednesday’s closing price. The last time the front month closed below $14 was Oct. 29, 1986, when it finished at $13.73.
The November contract traded at $13.88 to $13.99 a barrel, and volume was light. Other contract months closed lower.
OPEC Listener said Saudi Arabia will produce 5.2 million barrels a day in September, up from 5 million barrels a day in August and nearly 1 million barrels a day above the kingdom’s OPEC-assigned quota of 4.34 million barrels a day.
It said the United Arab Emirates’ September production will total 2 million barrels a day, up from 1.75 million barrels a day in August and more than double the 948,000-barrel-a-day production ceiling assigned to the UAE.
Twelve of the 13 OPEC nations, excluding Iraq, have agreed to limit total output to 15.06 million barrels through year-end. When Iraq’s production of 2.7 million barrels a day is included, the cartel pact calls for a ceiling of about 17.5 million barrels a day. Worldwide demand for OPEC crude is estimated at 18 million to 18.5 million barrels a day.
Prices for OPEC oil have fallen by about 25% since the beginning of the summer to about $12 a barrel, primarily because the cartel’s high production levels have resulted in a substantial surplus in worldwide crude supplies.
In European spot trading, the UAE’s Dubai light--the key OPEC crude from the Middle East--sank 43 cents to $10.48 a barrel. Britain’s widely traded North Sea Brent lost 39 cents to $12.41 a barrel.
Meanwhile, most contracts for oil products gained strength on the Chicago Mercantile Exchange. Wholesale unleaded gasoline for October delivery closed 0.25 cent higher at 46.42 cents a gallon. Other contract months were lower.
October heating oil rose 0.04 cent to 39.54 cents a gallon, and other monthly contracts also advanced.
Analysts said the gains in gasoline stemmed from the recent hurricane threat in the Gulf of Mexico when refineries and oil rigs halted operations.