01 Oct 2020 | 14:28 UTC — New York

OIL FUTURES: WTI falls 5% as market eyes rising global supply outlooks

Highlights

Iraq Sept crude exports up from August

Russia Oct crude exports expected up 9%

US manufacturing PMI falls to 55.4% in Sept

New York — WTI futures were down more than 5% midmorning Oct. 1 following reports that Iraq may have again failed to meet its OPEC+ production quotas.

At 1417 GMT, NYMEX November WTI was down $1.88 at $38.34/b and ICE December Brent was $1.71 lower at $40.59/b.

Iraq's federal oil exports remained nearly steady in September compared with August, the oil ministry said Oct.1, signaling OPEC's second largest producer may have yet again failed to implement compensation cuts to make up for overproduction between May and July.

Federal oil exports averaged 2.613 million b/d, up from 2.597 million b/d in August, ministry figures showed. The ministry did not publish production figures.

Iraq had pledged to cut an extra 400,000 b/d in each of August and September to make up for overproduction in May through July in a plan endorsed by Saudi Arabia and its Gulf allies. The country's August and September quota is 3.804 million b/d, excluding voluntary extra cuts to compensate for overproduction.

That would put Iraq's effective quota at 3.404 million b/d.

NYMEX November RBOB was 3.97 cents lower at $1.1419/gal and November ULSD was down 4 cents at $1.1122/gal.

Exports of Russian crude in October are expected to increase by 9% on the month to 14.4 million mt, or around 3.4 million b/d, but are 35% lower year on year compared with 5.3 million b/d in October 2019, according to data released by pipeline operator Transneft Oct. 1.

Russia, which owes the second-largest compensation cut of 333,000 b/d, has not yet submitted a plan to make up for previous overproduction in violation of quotas, according to an internal document seen by S&P Global Platts.

Of the 13 OPEC+ members that owe a collective 2.375 million b/d in compensation cuts, only six have outlined their planned schedule of cuts, which total 1.222 million b/d, the document shows.

The US manufacturing PMI for September fell to 55.4%, down 0.6 percentage point from August, the Institute for Supply Management said Oct. 1. The PMI indicates that while the economy continued to grow last month, it did so at a slowing pace.