The news sent WTI crude oil prices down nearly 1%. From the Wall Street Journal:
The IEA said global oil supply hit 97.2 million barrels a day in September, up 600,000 barrels a day compared to August, and 200,000 b/d higher year-on-year. The majority of the rise came from Russia which output rose by 400,000 b/d to a post-Soviet high of 11.1 million b/d.
The downward oil price move reversed much of Monday’s gains, which were boosted by Russia’s production cut claims:
The data came 24 hours after Russian President Vladimir Putin told a conference in Istanbul that his country was prepared to freeze or cut production to help stabilize oil markets. His comments sent Brent to a 2016 high of $53.73 during yesterday’s trading.
Prior to November’s planned OPEC production cap, oil producers are actually stepping up production considerably, which will lead to an even larger glut in inventories in the short term:
“All producers will want to increase production by as much as possible to give themselves a higher base for negotiations,” the analyst said. “The solution is a double-edged sword in that it will also lead to several bearish elements engulfing the market in the coming weeks. If an agreement is not reached in November, there will surely be a large price correction to follow.”
The pressure is now on OPEC to deliver on its long-rumored production cap pact, which has boosted oil prices more than 10% in the past month. Similar production measures have been attempted in the past, but always fell apart when member nations couldn’t agree on the details.
The United States Oil Fund LP ETF (NYSE:USO) fell $0.07 (-0.60%) to $11.60 per share in premarket trading Tuesday. Year-to-date, the largest ETF tied to WTI crude oil prices has gained 6.09%.