Brent lost $1.01 Tuesday to settle at $53.93 per barrel, and West Texas Intermediate fell 86 cents to $50.93 per barrel.
The volumes may have been achieved before the Organization of the Petroleum Exporting Countries (OPEC) agreement to reduce output last week, but a Reuters survey shows that November production for the cartel was a record 34.19 million barrels per day (bpd), and this combined with Russia's November volume of 11.21 million bpd - its highest in nearly 30 years – caused another market dip on Tuesday.
Brent lost $1.01 to settle at $53.93 per barrel, and West Texas Intermediate fell 86 cents to $50.93 per barrel.
The combined output of OPEC and Russia in November is said to be enough to meet half of the world's oil demand, which is just over 95 million bpd.
Bob Yawger, Mizuho Securities USA Inc.
They are going to be hard-pressed to squeeze 300,000 barrels from this crew
Causing market watchers further trepidation is evidence that Saudi Arabia's fight for market share isn't over despite the passing of the Vienna accord: Saudi Aramco has cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.
In addition to the record production, Bob Yawger, director of the futures division at Mizuho Securities USA Inc., says another factor impacting market performance is "skepticism about the meeting next weekend: they are going to be hard-pressed to squeeze 300,000 barrels from this crew."
Yawger is referring to a meeting in Vienna on Saturday in which OPEC hopes non-members will be persuaded to cut another 300,000 barrels a day beyond the 300,000 already promised by Russia.
As usual, Tuesday's drop in market prices has caused analysts to speculate on where oil is headed in the near term: Matt Stanley, fuel broker for Freight Investor Services International, believes the market is trying to find "some kind of level it is happy settling at; I have a feeling it is more towards the $50 per barrel range than $55 per barrel, not least because there is still ambiguity around production levels."
But if the U.S. shale industry is inspired to ramp up production in the wake of the OPEC deal, Ivan Glasenberg, chief executive officer of Glencore, warns that prices could drop to $35.
On the other end of the spectrum is Pierre Andurand, chief investment officer and founder of Andurand Capital Management LP; he told Bloomberg, "I think we will see $60 by the end of the month and $70 next year; we are still at very low prices."
Earlier this week, Chris Weafer, senior partner at Macro-Advisory, expressed doubt that Russia will ultimately abide by the OPEC accord: "even if the government was committed to contributing, it's difficult to see how they would get the companies to do it; it's not like an OPEC structure," he said, referring to OPEC countries that usually have a state firm obeying government directions on oil production, compared to the companies in Russia involving private investors.