Highlights
OPEC members, Nigeria and Iran, have been cheating on their crude oil quota the past two months while other OPEC members did maintain reduced production. OPEC produced more crude in August than they did in July, but OPEC leaders (aka Saudi Arabia) swept that under the rug to keep prices on an upward trajectory. However, after the same two “villians” over produced again in September, the Saudis “blew the whistle” yesterday and crude oil prices slumped $2 and settled almost $6 lower than Thursday’s high of $95.03 on the November West Texas Intermediate (WTI) crude oil futures contract. In 1986, the same thing happened repeatedly and Saudi Arabia responded by showing the other OPEC members what over producing crude oil can do by flooding the world with crude oil, taking world crude prices down to $6 a barrel. That generation of OPEC leaders is gone, so it may be time for another “teaching moment.”
Even though U.S. oil producers are now deploying the lowest number of drilling rigs since February of 2022, America's crude oil production probably was a monthly record in September at 13 million barrels per day, matching the all-time output of November 2019. Insiders expect US crude will be 13.1 million barrels per day before the end of 2023.