Crude Firms As Reuters Claims OPEC+ is "Struggling" to Raise Output

OPEC could be struggling to raise production. File Image / Pixabay

After a week of losses, crude on Friday inched higher due to signs of surging demand in China: Brent was up 32 cents at $79.61 per barrel, while West Texas Intermediate climbed a tepid 26 cents to $68.91 per barrel.

However, for the week Brent and WTI futures were down 1 and 3.4 percent respectively, moreover, the Chinese data giving crude a mild boost was mixed: although refinery throughput rose to a record high of 12.49 million barrels per day (bpd) in September, China also reported its weakest economic growth since 2009 in the third quarter, with gross domestic product expanding by a less than anticipated 6.5 percent.

Also said to have capped gains was U.S. crude stocks last week climbing 6.5 million barrels, triple what analysts had estimated; Stephen Innes, head of trading APAC at OANDA, said the build "was a complete shocker, sending oil markets spiraling lower amidst some concerning development for oil bulls."

According to CNBC, Friday also saw front-month U.S. crude futures trading at the biggest discount to the second month in nearly a year, and traders reportedly anticipated further inventory builds in the delivery hub of Cushing, Oklahoma, as new pipelines come online.

However, from the perspective of media, the threat of a market tightening is ever-present.

On Friday, Reuters reported on an internal document it had seen prepared by the Organization of the Petroleum Exporting Countries (OPEC) for a technical panel meeting: it showed that Saudi Arabia had raised output by 524,000 bpd in September compared to May, contributing to the cartel's total of an extra 628,000 bpd in September compared to May.

Plus, non-OPEC nations cooperating with the cartel pumped an extra 296,000 bpd since May, while Russia increased output by 389,000 bpd.

This is in comparison to Iran, scrambling to maintain its equilibrium under the U.S. sanctions, cutting production by 376,000 bpd in September versus May.

Reuters believed this to be evidence that the cartel "is struggling to add barrels to the market," and it reiterated previously published arguments from Iran officials that there is no spare capacity and that the Saudis have failed to deliver the total extra 1 million bpd it had promised to pump to offset Iran's losses - even though OPEC has stated it is on course to do so.

It's unclear what effect Reuters' spin on OPEC output will have on the crude market, but earlier this week, as oil continued its price plunge, JBC Energy noted that "assuming Iranian crude exports will stabilize around 900,000 bpd, one can make the strong case that the peak bullish impact of Iran is in fact already behind us."