HOUSTON: Oil prices fell on Wednesday on a bigger-than-expected rise in US crude inventories and record production in the world’s biggest producer, along with mounting worries about demand in Asia.
Brent futures were down 97 cents to $81.47 a barrel at 11:35 a.m. ET (16:35 GMT). US West Texas Intermediate (WTI) crude was down $1.31 to $76.94.
US crude stocks rose by 3.6 million barrels in the latest week to 421.9 million barrels, according to the US Energy Information Administration (EIA), far exceeding analysts’ expectations in a Reuters poll for a 1.8 million-barrel rise.
US domestic crude production stayed at a record 13.2 million barrels per day, the data showed. “US supply activity is headwind for the market, and US is a problem for OPEC+,” said John Kilduff, partner at Again Capital LLC in New York, adding that he does not think Saudi Arabia can cut more output to boost prices.
Top oil exporters Saudi Arabia and Russia said this month they would continue with their additional voluntary oil output cuts until the end of the year.
In an indication of strong demand, US gasoline stocks saw a surprise draw of 1.5 million barrels, while diesel stocks drew more than expected at 1.4 million barrels. EIA released data for 2 consecutive weeks on Wednesday, after a delay last week due to a systems upgrade. American Petroleum Institute figures on Tuesday had showed rising crude oil and gasoline inventories last week, according to market sources. Weighing on demand were economic worries in Asia. China’s oil refinery throughput eased in October from the previous month’s highs as industrial fuel demand weakened and refining margins narrowed. Still, economic activity there perked up in October as industrial output increased at a faster pace and retail sales growth beat expectations.
Japan’s economy contracted in July-September, snapping two straight quarters of expansion on soft consumption and exports. US retail sales also fell for the first time in seven months in October.
The International Energy Agency joined the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in raising oil demand growth forecasts for this year, despite projections of slower economic growth in many major countries.