Crude oil prices in a tail spin after OPEC reports production figures that are higher than a ceiling proposed in September. File Photo by Monika Graff/UPI | License Photo
NEW YORK, Nov. 11 (UPI) -- A reported increase in production from OPEC and an assessment of a standstill global economy sent crude oil prices sharply lower in early Friday trading.
Markets have been volatile in the days since Donald Trump passed the Electoral College threshold to clear his path to the White House early Wednesday. The Dow Jones Industrial Average has been in rally mode, while the tech-heavy Nasdaq has moved toward steep declines.
Volatility reflects the sentiments of investors trying to guess what a politically untested Trump will do in office. The Trump win overshadowed energy market dynamics early this week, though attention has shifted back toward more fundamental economic factors.
Supply-side pressures pushed oil prices below $30 per barrel early this year before summer trends left oil inventory levels lower. Lower crude oil prices suppressed exploration and production activity, but some recovery has emerged in the latter half of the year.
The Organization of Petroleum Exporting Countries reported that its 14 members produced a combined average of 33.6 million barrels per day, an increase of 240,000 bpd from the previous month. That's above what OPEC has considered for a production ceiling designed to bring the market back to balance.
The price for Brent crude oil dropped 2 percent at the start of trading in New York to $44.0 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 2.3 percent to open the day at $43.62 per barrel.
OPEC economists said the growth prospects for the global economy were unchanged for 2016 and 2017. The monthly market report noted crude oil futures increased as traders reacted to a production ceiling offered by OPEC members in Algeria.
"Nevertheless, prices came under pressure from a double-digit rise in the U.S. oil rig count and a strengthening of the U.S. dollar," the report read.
Brent crude oil prices are down about 7 percent from when OPEC offered a production proposal in September.
October production from OPEC was about a half percent higher than the previous month and nearly 2 percent above the ceiling proposed in September. World oil demand growth for 2016, meanwhile, was adjusted slightly lower to 1.23 million bpd and the prediction for 2017 was steady at around 1.15 million bpd.
Without action on production, OPEC said to expect a market that still favors the supply side next year.