Oil declines as OPEC members boost output, U.S. rig count gains

Oil declined as OPEC members added supply and U.S. producers increased drilling, threatening to compound a global surplus.

Futures fell by as much as 1.8 percent. Libyan output expanded to 560,000 barrels a day, according to the National Oil Corp., up from 540,000 last week. Iran repeated plans to boost production to 4 million barrels a day. Nigeria aims to raise output by 400,000 barrels a day to 2.2 million, Oil Minister Emmanuel Ibe Kachikwu said in New Delhi. Rigs targeting crude in the U.S. rose for a seventh week to the highest since February, Baker Hughes Inc. said.

Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries will implement an agreement to reduce supply. An OPEC committee will meet later this month to try and resolve differences over how much individual members should pump. The details of how supply will be reduced needs to be finalized by the group’s next meeting in Vienna on Nov. 30.

“There’s a growing recognition that OPEC will have a hard time getting their act together,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida.

West Texas Intermediate for November delivery slipped 47 cents, or 0.9 percent, to $49.88 a barrel at 10:41 a.m. on the New York Mercantile Exchange. Total volume traded was 13 percent above the 100-day average.

Iranian Plans

Brent for December fell 39 cents, or 0.8 percent, to $51.56 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.24 premium to December WTI.

Iran is seeking to pump 4 million barrels a day within two weeks, up from 3.89 million now, Ali Kardor, the managing director of National Iranian Oil Co., said at a conference in Tehran. The country is targeting an average daily output of 4.28 million barrels of crude and 1 million barrels of condensate within four years, Oil Minister Bijan Namdar Zanganeh said.

“There have been a lot of bearish OPEC headlines,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The market is going to move up and down on OPEC headlines until questions are answered at the meeting on Nov. 30.”

Drilling Activity

U.S. drillers added four rigs to 432 last week, Baker Hughes said Friday. Explorers have added more than 100 rigs since an expansion began in June. The nation’s crude supplies rose to 474 million barrels in the week ended Oct. 7, according to the Energy Information Administration. That’s the highest for that time of year since the EIA began publishing weekly data in 1982.

“The U.S. rig count continues to grow,” said Hamza Khan, an analyst at ING Bank NV in Amsterdam. “The continual increase in the number of rigs does suggest that the upside in crude prices should be capped, with the threat of U.S. oil output returning.”