Oil prices were plunging once again on Friday morning, as news of much higher OPEC oil production in October cast doubts over the prospects of a coordinated production cut this month.
OPEC’s oil production in October rose a whipping 240K barrels per day to 33.64M barrels, the cartel said in its latest monthly report on Friday. The countries of Nigeria, Libya and Iraq drove the bulk of the rising supply. Those countries, which are almost entirely reliant on oil exports to support their domestic economies, are petitioning for exemptions from the proposed production cap.
That 33.64 million barrel level is about one million barrels per day above the high-end of the range agreed to at OPEC’s September meeting. OPEC member nations will meet again soon to try and hammer out details of an agreement to put a cap on its output, but the prospects of a deal appear to be rapidly fading.
At the time of writing, WTI Crude was trading down $1.14 (-2.55%) to $43.52 per barrel, its weakest level since early August.
Today’s big oil price pullback is pushing leveraged oil plays much lower. The double leveraged ProShares Ultra DJ-UBS Crude Oil (NYSE:UCO) fell $0.35 (-3.99%) to 8.43 per share in Friday morning trading.
Meanwhile, the triple leveraged VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:UWTI) plunged $1.01 (-5.53%) to $17.27 per share, hitting fresh all-time lows.
Investors should note these leveraged instruments are designed only for day traders with very high risk tolerance. Over long time spans, they will almost always lose significant value.