Wednesday 12 October 2016 3:04 pm

Oil prices fall after Opec points to bigger crude surplus in 2017

Oil prices turned lower this afternoon after the Organisation of Petroleum Exporting Countries (Opec) pointed to a larger surplus next year.

Brent crude, the global benchmark, slumped 1.09 per cent to $51.84 per barrel.

Its US counterpart, West Texas Intermediate crude, fell 1.32 per cent to $50.12, having recovered slightly after falling just below the $50 mark.

Both benchmarks had been in positive territory earlier in the day, after rising to their highest level in 2016 earlier this week.

Read more: Is 2016 the turning point for energy storage?

It comes despite Opec's provisional agreement to cut production by around 700,000 barrels per day, a move which would limit its output to between 32.5m and 33m barrels per day.

The oil cartels members are expected to finalise the deal terms at a meeting in Vienna on 30 November.

But Opec's monthly report released today has showed that it pumped 33.39m barrels per day (bpd) last month, up 220,000 bpd from August. This was mainly due to increased production from Nigeria, Libya and Iran.

Read more: Rosneft boss says he will not comply with output freeze as oil prices dip

Opec also increased its forecast for non-Opec supply next year to 240,000 bpd, up 40,000 bpd from its previous estimate due to new projects starting up in Russia.

With demand for Opec crude in 2017 expected to average 32.59m bpd, the report suggests there will now be an average surplus of 800,000 bpd if Opec keeps output steady. Last month's report pointed to a 760,000 bpd surplus.

Opec left its global oil demand outlook unchanged, predicting demand growth of 1.15mbpd in 2017.