Oil prices settled down more than 2 percent on Friday after OPEC said October output reached another record, casting doubt on whether its plan to limit production is achievable or enough to ease persisting oversupply in the market.
The Organization of the Petroleum Exporting Countries (OPEC) said Friday that its output rose to 33.64 million barrels per day (bpd) last month, up 240,000 bpd from September.
OPEC plans to cut or freeze output, but investors are skeptical that such a deal will be reached during the cartel’s Nov. 30 meeting and also concerned that whatever agreement reached would not be effective.
Based on its record October output, OPEC would have to trim up to a million barrels per day of output to make good on its promise to reduce production to between 32.50 million bpd and 33.0 million bpd.
“The fact that they were already producing an increased amount certainly makes whatever cuts they may want to make more difficult,” said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.
International Brent crude futures LCOc1 settled at $44.75 per barrel, down $1.09, or 2.4 percent. It had reached a low of $44.19, the lowest since August.
U.S. West Texas Intermediate (WTI) futures CLc1 were down by $1.25, or 2.8 percent, to $43.41 per barrel, after recovering from a low of 43.04.
The benchmarks’ session lows were more than 3 percent lower than their previous settlement. Brent and WTI settled down about 2 percent lower for the week.
Adding to bearish sentiment were data by oil services company Baker Hughes Inc (BHI.N) that showed U.S. drilling rigs rose by two in the week to Nov. 11 to 452 rigs, an increase in 21 weeks out of the last 24.
Crude futures have wiped out gains made since the end of September when OPEC said it would agree to cut oil production.
The International Energy Agency (IEA) has said global supply rose by 800,000 bpd in October to 97.8 million bpd, and the supply overhang could run into a third year in 2017 should OPEC fail to act.
“There’s so much oil coming to the market,” said Tariq Zahir, trader at Tyche Capital Advisors in New York. “Prices deserve to be here, maybe even a little lower.”
Beyond oversupply, a surging dollar .DXY following the initial shock of Donald Trump’s U.S. presidential election win also put pressure on prices, traders said.