OPEC raised crude output to the highest in more than three years as it pressed on with a strategy to protect market share and pressure competing producers.
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Output from the Organization of Petroleum Exporting Countries rose by 230,100 barrels a day in November to 31.695 million a day, the highest since April 2012, as surging Iraqi volumes more than offset a slight pullback in Saudi Arabia. The organization is pumping about 900,000 barrels a day more than it anticipates will be needed next year.
Benchmark Brent crude dropped to a six-year low in London this week after OPEC effectively scrapped its output ceiling at a Dec. 4 meeting as de facto leader Saudi Arabia stuck to a policy of squeezing out rival producers. Members can pump as much as they please, despite a global surplus, Iran’s Oil Minister Bijan Namdar Zanganeh said after the conference.
Oil gave up most of its early gains on Thursday to trade around US$40 per barrel as persistent oversupply concerns offset a surprise fall in U.S. crude inventories after 10 weekly rises.
Brent futures are down more than 6 per cent this week and having dipped below US$40 per barrel there are renewed expectations it might test 2008’s low around US$36.
West Texas Intermediate (WTI) U.S. crude futures were down 11 cents at US$37.05 per barrel, erasing early gains. WTI is down nearly 13 per cent this month.
Non-OPEC supply will fall by 380,000 barrels a day next year, averaging 57.14 million a day, with an expected contraction in the U.S. accounting for roughly half the drop, the organization said Thursday in its monthly report. It increased estimates for non-OPEC supply in 2015 by 280,000 barrels a day.