“Given that Iran, Libya, and Nigeria are already exempt, leaving Iraq’s 4.7 million barrels a day in production off the list would either prompt others to abandon a deal or greatly weaken the resulting agreement,” said Tim Evans, a Citi Futures analyst. –– ADVERTISEMENT ––Iraq, the second biggest producer in OPEC after Saudi Arabia, over the weekend said it should be exempt from any deal to scale back production as it needs the oil revenue to fund its ongoing war against the Islamic State militants. Some media reported that Iraq is only willing to freeze at its September level. The country produced 4.78 million barrels last month, according to its own reporting.
OPEC members last month reached a preliminary agreement to limit the group’s daily production to a range between 32.5 to 33 million barrels a day. The agreement did not include any individual output quotas, a thorny issue that remains a major divisive factor among the members.
Skeptics say even if a deal is cemented in the November 30 meeting, members will likely ignore the quotas and produce at will in order to claw back their lost oil revenue and protect their market shares.
Another wild card that could derail the deal is Russia, which has not offered a clear commitment to join OPEC’s efforts to curb production. Russia’s oil production reached a post-Soviet high in October of 11.2 million barrels a day. The country’s biggest energy company Rosneft recently indicated that it has the capacity to ramp up production if the demand requires.
Russia officials said it would send oil officials to attend a meeting in Vienna to meet with their OPEC counterparts later this month to discuss options.
Meanwhile, analysts are also keeping an eye on the weekly changes in U.S. crude inventories and productions. Analysts surveyed by S&P Global Platts estimate a growth of 400,000-barrels in the U.S. crude stocks in the week ended October 21 as some refineries are still under their seasonal maintenance.
The firm estimates a drawdown of 1.5-million barrels in gasoline stocks and a 1.9-million barrels decrease in distillates stocks. Official data by the U.S. Energy Information Administration will be released Wednesday.
China’s crude imports, however, remains a bright spot in the global oil markets. In September, the world’s second largest oil consumer imported 8.08 million barrels a day of crude, an 18% rise compared with same month last year. The increase is largely due to the government’s aggressive efforts to fill up its strategic reserves, said Energy Aspects.
China’s buying of foreign crude will likely remain strong ahead of the winter months due to anticipated heating needs, said Peter Lee, an energy analyst at BMI Research.
Nymex reformulated gasoline blendstock for November RBX6, -0.45% — the benchmark gasoline contract — fell 50 points to $1.4988 a gallon, while November diesel traded at $1.5781, 17 points lower.
ICE gasoil for November changed hands at $467.75 a metric ton, up $3.50 from Monday’s settlement.
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