Global oil benchmark renews push toward $85 a barrel as OPEC+ struggles to boost output

Global oil benchmark renews push toward $85 a barrel as OPEC+ struggles to boost output

Global oil benchmark renews push toward $85 a barrel as OPEC+ struggles to boost output

Oil futures rose Tuesday, with global benchmark Brent crude trading around the $85-a-barrel level amid signs the Organization of the Petroleum Exporting Countries and its allies are struggling to meet output quotas.

West Texas Intermediate crude for November delivery
CLX21,
+0.45%

rose $1.04, or 1.3%, to $83.48 a barrel on the New York Mercantile Exchange. December WTI
CL00,
+0.44%

CLZ21,
+0.44%
,
the most actively traded contract, was up 97 cents, or 1.2%, at $82.66 a barrel.

December Brent crude
BRN00,
+0.27%

BRNZ21,
+0.27%
,
the global benchmark, was up 69 cents, or 0.8%, at $85.02 a barrel on ICE Futures Europe. Brent on Monday pushed above $86 a barrel to hit a three-year intraday high, but retreated to finish slightly lower.

But crude was back on the rise Tuesday on expectations supplies will remain tight, said Carsten Fritsch, analyst at Commerzbank, in a note. A report from Reuters on Monday said that OPEC+ countries were 115% in compliance with output cuts in September, showing that members are struggling to meet targets after the group agreed earlier this year to ease production restrictions in monthly increments of 400,000 barrels a day.

Read: Why soaring oil prices could soon make the stock market sputter

Even if OPEC+ hit its target, it wouldn’t be enough to plug the gap between demand and supply, Fritsch said. The compliance shortfalls mean that OPEC has made less supply than agreed over the past three months, coming up short by around 750,000 barrels a day in September alone, he noted.

“This is attributable to production problems in Angola and Nigeria that will not be resolved anytime soon,” Fritsch wrote. “For as long as Saudi Arabia and other countries with sufficient spare capacities are unwilling to offset these outages by stepping up their own output, OPEC+ is also likely to produce less oil than agreed in the coming months, thereby keeping supply tight.”