Oil down four percent on concerns over rising Iraqi exports, U.S. output

Mon Jan 9, 2017 3:24pm EST
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By Catherine Ngai

NEW YORK (Reuters) - Oil prices tumbled by 4 percent on Monday on concern that record Iraqi crude exports and rising U.S. output would undermine OPEC's efforts to curb global oversupply.

U.S. crude futures CLc1 settled down $2.03 at $51.96 a barrel, while Brent futures LCOc1 settled down $2.16 at $54.94 a barrel.

In Iraq, OPEC's second-biggest producer, oil exports from the southern Basra ports reached a record high of 3.51 million barrels per day (bpd) in December, the oil ministry said.

OPEC members agreed in November on the first deal to cut oil output since 2008, limiting supplies to 32.5 million bpd starting Jan. 1 for six months.

Iraq's oil ministry underscored that the high levels from the south would not affect the country's decision to cut January production to comply with the OPEC agreement. But some remained concerned over the feasibility of the cuts, which would have to come from the north.

"We have compliance with the Gulf countries, but the rest of the slate is looking a bit shaky," said Robert Yawger, director of the futures division at Mizuho Securities USA.

"With the big numbers coming out of the southern port of Basra for December ... it's implying that Iraq may be the first big crack in the wall of the OPEC agreement," he added.

Sources also told Reuters that Iraq's State Oil Marketing Company had given three buyers in Asia and Europe full supply allocations for February.   Continued...

Rigging equipment is pictured in a field outside of Sweetwater, Texas June 4, 2015.  REUTERS/Cooper Neill