WTI under $50

Oil prices slipped Monday morning over concerns of global oversupply despite promises from OPEC leader Saudi Arabia that the group would work to limit production at its next meeting in November. Both U.S. and international crude benchmarks were down more than $0.50 per barrel in trading Monday morning after breaking above $50 in October.

The number of rigs drilling in the U.S. continued to climb last week adding to concerns that prices above $50 per barrel would be enough for North American E&Ps to begin increasing production.

“Record supply from OPEC year-to-date, weaker global GDP estimates, and still elevated inventories cause us to lower and flatten our oil price outlook,” Bernstein Energy said in a note.

OPEC’s promise to find a compromise on production is helping support international crude prices above $50 per barrel, but the group recorded record-high production of 33.6 MMBOPD in September. Nigeria expects to continue increasing production by 22% to 2.2 MMBOPD by the end of December, oil minister Emmanuel Ibe Kachikwu said. Libya’s output continues to rise as well as the country brings ports back online.

A stronger dollar is also driving oil prices down as markets start to value the currency higher in anticipation of a Federal Reserve rate increase later this year. The USD hit a seven-month high against a basket of currencies over the weekend.

Dollar-denominated commodities like oil become more expensive for holders of other currencies when the U.S. currency strengthens, curbing demand.

Low oil prices take a bite out of OPEC member Kuwait

North American producers are not alone in feeling the pressure from lower oil prices, however. Over the weekend, Kuwait’s ruler, Sheikh Sabah al-Ahmed al-Sabah, dissolved Parliament by royal decree, reports New York Times.

The government’s statement following the dissolution focused on security concerns, but lower oil prices are also putting pressure on the country of 3.9 million people. Government-subsidized gasoline prices have been raised, and other benefits have been cut as the country looks for ways to bridge its fiscal deficit. Kuwait’s Parliament had planned to question government officials in the coming weeks about subsidy cuts, so it appears possible that stopping their testimony could have played a role in al-Sabah’s decision, said the Times.

Kuwait was the No. 10 largest global oil producer for 2015, at 2.7 MMBOPD, according to the EIA. Kuwait produces about a quarter as much oil as Saudi Arabia, the world’s No. 2 producer for 2015.

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