- Russian October production rose to 19.78 million barrels a day
- Iran to announce 500,000 b/d output increase at OPEC meeting
Crude dropped from a two-week high as Russian production climbed and new data on Chinese manufacturing signaled a slowdown in demand.
Futures fell 1 percent in New York. Russian oil output broke a post-Soviet record in October for the fourth time this year, while Iran said it will tell OPEC next month of its plans to raise production by 500,000 barrels a day. China’s purchasing managers index remained at 49.8 in October, the National Bureau of Statistics said Sunday, compared with an estimate of 50, the line between expansion and contraction.
Oil has traded below $50 a barrel since October amid signs of a prolonged global glut as rising U.S. stockpiles keep supplies more than 100 million barrels above the five-year seasonal average. The Organization of Petroleum Exporting Countries continues to pump crude above the limit the group set for itself, with production near the highest level since 2008.
"Russian output reached another post-Soviet high and there were more disappointing numbers out of China, putting an end to the rally late last week," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "We continue to pivot on either side of $45 a barrel, and I don’t see that changing for a while."
West Texas Intermediate for December delivery fell 45 cents to settle at $46.14 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 34 percent below the 100-day average at 2:45 p.m. Prices have decreased 13 percent this year.
Brent for December settlement dropped 77 cents, or 1.6 percent, to end the session at $48.79 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $2.65 premium to WTI.
Russia’s production of crude and gas condensate, which is similar to light oil, averaged 10.78 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit. That’s an increase of 1.3 percent from a year earlier and 0.3 percent more than the previous month.
Iran will officially inform other OPEC members of its plans to raise output at the group’s Dec. 4 meeting, Oil Minister Bijan Namdar Zanganeh said in an interview with the Mehr news agency. The plans to boost production by 500,000 barrels a day shouldn’t send crude lower because the additional barrels are already priced in, Mehr reported, citing Zanganeh. The nation expects to raise output by 1 million barrels a day by the end of the Iranian year in late March.
While China’s industrial output continued to contract last month, data from Europe and America topped estimates.
"I’m surprised we fell so strongly earlier today because the lackluster Chinese data was no big surprise," Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, said by phone. "We’ll soon see demand ramp up because of the winter refining season. I wouldn’t be surprised if WTI is trading between $55 and $60 a barrel by the end of the year."
U.S. refineries boosted operating rates in the week ended Oct. 23, Energy Information data show. American refiners boosted utilization in November during four of the past five years as the annual maintenance period -- timed to a post-summer lull in fuel demand -- finishes and refineries gear back up for winter.
The EIA will probably report Wednesday that U.S. refineries bolstered operating rates again last week while crude inventories climbed, according to the median of responses in a Bloomberg survey.
Money managers’ short position in WTI crude jumped 24 percent in the week ended Oct. 27, according to data from the Commodity Futures Trading Commission. Net-long positions declined 15 percent, the most since July. Traders curbed their bullish stance in Brent crude during the same period to the lowest since Sept. 1. Speculators cut Brent net-longs to 161,916 contracts, according to data from ICE Futures Europe.