Crude Oil Futures Drops By 1% On Higher OPEC Output Survey

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Crude futures steadied late in the session on Friday, following the stock market slightly higher after earlier swinging lower on a weakening oil demand outlook.

The cartel said OPEC production in September, as reported by secondary sources, rose month over month by 132,000 barrels a day to a daily average of 32.76 million barrels.

"The demand side of the oil equation is always much more hard to discern than the more transparent supply side and as equities slide amidst rate increases, the oil market could begin to discount a worst-case scenario with regard to oil demand expectations", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

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Oil prices have slumped to more than two-week lows as global stock markets fall, with investor sentiment made more bearish by a bigger-than-expected build in U.S. crude inventories.

"The market has been reacting to perceptions of a possible supply shortage", OPEC Secretary-General Mohammad Barkindo said Thursday on a conference in London according to Reuters. However, oil market basics do not point out that this demand is apparent.

Oil prices dropped 2 percent on Wednesday as U.S. equity markets broadly fell, even though energy traders anxious about shrinking Iranian supply from U.S. sanctions and kept an eye on Hurricane Michael, which closed some U.S. Gulf of Mexico oil output. Brent crude for December delivery traded down about 1.6% at $81.78.

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New Delhi wants to continue purchasing Iranian oil through this round of sanctions, although it is preparing to trim imports to win waivers from the United States.

The world's biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as US sanctions on Iran reduce crude exports from the Islamic republic.

Among others with a relatively bullish view was Alex Beard, chief executive for oil and gas at Glencore (GLEN.L), who forecast at the same event a mid-term oil price of $85-90. "I can't see anything that will affect oil prices dramatically to the downside". India had reduced purchases from Tehran previous year due to a dispute over development rights of a giant gas field. Slowing oil demand growth, a well-supplied market, and overstated fears that Saudi Arabia can't make up for the Iranian shortfall are Törnqvist's reasons to expect oil prices to drop from current levels.

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Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions.

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