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NYMEX Crude $ 47.10 DN $2.5300
NY Harbor ULSD $1.5024 DN $0.0885
NYMEX Gasoline $1.3411 DN $0.0756

NEWS
Oil futures settled sharply lower Monday as data showed members of the Organization of the Petroleum Exporting Countries continued to pump at a breakneck pace last month, leaving crude to give back some of last week’s sizable gains.

On the New York Mercantile Exchange, light, sweet crude futures for November delivery dropped $2.53, or 5.1%, to end at $47.10 a barrel. November Brent crude on London’s ICE Futures exchange fell $2.79, or 5.3%, to finish at $49.86 a barrel. Both contracts saw their largest one-day price and percentage declines since Sept. 1. While crude seemed to find early support from OPEC’s monthly bulletin, which forecast U.S. oil output will drop in 2016 for the first time in eight years, the focus soon shifted back to OPEC output, which rose 109,000 barrels a day in September to 31.57 million.

Given a lackluster tone in the U.S. stock market and thin trading due to the Columbus Day holiday, futures were ripe for a modest setback, said Phil Flynn, senior market analyst at Price Futures Group in Chicago. Flynn contends the market is likely putting in a bottom, as U.S. production falls and producers slash capital spending. But he warned that bottoms “can be messy,” with more volatility likely ahead.

Monday’s setback follows a strong week for crude-oil. Nymex futures last week saw the largest one-week percentage gain since the end of August, climbing 8.9%, while Brent registered a 9.4% increase. Baker Hughes Inc. last week reported a decline in the active U.S. oil rig count for the fifth straight week, dropping by nine, bringing the total count to 605, the lowest since June 2010. Rig count is an important gauge of future production. “Market confidence is up because we are hearing the same message from everywhere that market is rebalancing,” said Barnabas Gan, an Oversea-Chinese Banking Corp. Ltd. oil analyst, identifying Asia, particularly China, as the main demand driver in the near term.

Oil prices have suffered a major blow due to oversupply. Moreover, major oil producers’ reluctance to curb production to protect market share has kept prices in the trough. Both Nymex and Brent prices are down by nearly half since last summer. However, recent talk of possible collaboration between members and nonmembers of OPEC has injected some optimism into the market. In its monthly oil report, OPEC said oil supply from countries outside the organization should decline. “In terms of non-OPEC supply, the impact of lower oil prices on production has resulted in the supply growth forecast being downwardly revised to 720,000 barrels a day in 2015, some 600,000 barrels a day less than the initial forecast and well below the previous year,” OPEC said in the report.

Market participants are watching to see if Saudi Arabia and Russia, the biggest non-OPEC producer, will meet later this month to discuss the oil market, as some reports have indicated, said Stuart Ive, a client manager at OM Financial. On Sunday, Qatar’s energy minister, Mohammed Al Sada, said oil prices have bottomed out and supplies from non-OPEC countries will likely turn negative next year, while demand could reach 30.5 million barrels a day from 29.3 million in 2015.