Oct. 6 (UPI) -- More signs of a short-term oversupply situation for the global oil market and U.S. economic challenges pushed the price of oil sharply lower on Friday.
The price of oil found support mid-week when Russian President Vladimir Putin hinted that an agreement steered in part by the Organization of Petroleum Exporting Countries to balance the market with managed production cuts could be extended through the end of next year.
Parties to the agreement earlier this year decided to extend the one-year deal, implemented in January, into March. Russian Energy Minister Alexander Novak, speaking ahead of the president, said summer 2018 may be a good time to pull back from the effort.
A survey from S&P Global Platts on OPEC production for September found compliance was strong, but total member state production increased by 10,000 barrels per day.
"OPEC's 14 members saw their collective September output rise to 32.66 million barrels per day from 32.65 million barrels per day in August," the report read. "That is some 740,000 barrels per day above its declared ceiling of about 31.92 million barrels per day, when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted."
Though a minor gain, it adds to short-term concerns about an oversupplied market and follows a report earlier this week of a record level for U.S. crude oil exports.
The price for Brent crude oil was lower than Thursday's close by 1.3 percent to hit $56.24 per barrel at 9:13 a.m. EDT. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 2.1 percent to $49.72 per barrel, losing the psychological level of $50 per barrel it held since mid-September.
On the economic front, the U.S. Labor Department said Friday the overall picture was more or less even despite the lingering impacts from Hurricanes Irma, Harvey and Maria, three storms that hit U.S. states in territories over the last month.
Nevertheless, there were short-term pressures with total non-farm payroll dropping 33,000.
"In September, a steep employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey," the department's brief read.
The market remains tight as the number of long-term unemployed, those without a job for more than five months, stayed the same.
The slump in prices Friday may not last the weekend. Tropical Storm Nate is headed north from Honduras and expected to make landfall in Louisiana as a hurricane early Sunday morning. Anadarko Petroleum and BP confirmed in public statements that some platforms were evacuated ahead of the storm and Norwegian oil major Statoil told UPI that staff were pulled off its Titan platform, which isn't in production at the moment.
The Gulf of Mexico accounts for about 17 percent of total U.S. crude oil production.
Markets later in the morning may be influenced by data on exploration and production from drilling services company Baker Hughes. Reported as rig counts, gains, particularly in North America, could be a sign of eventual production gains and added to emerging oversupply concerns.