OPEC Output Report Dilutes Prospects of A Production Deal – Powerful Opportunity For Sellers

WTI crude oil plunged on Wednesday, extending losses after hitting six month highs at around $51.58 per barrel recorded on Monday. Crude prices plummeted after the OPEC published its production data for September. On top of the fact that the cartel’s oil output last month reached eight-year highs, the report sapped investor confidence in a potential production cut/freeze deal by reporting data that conflicts with information provided by individual member countries.

While some members such as Saudi Arabia, Iraq and Venezuela said they pumped more oil last month than what has been reported, Nigeria said its production was lower and Iran declined to report its numbers. Markets are showing concerns over the possibility of any real agreement on a production ceiling, and the details of the specific quota for each member, which will be discussed next month.

The question is how can OPEC reach a consensus on how much each country should pump if the cartel cannot accurately estimate the production of each member?

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