U.S. crude oil turns lower as inventories spike; domestic output hits record high

U.S. crude oil futures fell for a third straight session Thursday, erasing nearly all gains that initially followed Hamas’ attack on Israel last weekend.

WTI crude fell after the U.S. Energy Information Administration showed domestic inventories surged by 10.2M barrels last week, as U.S. oil production hit its highest on record.

U.S. production rose by 300K bbl/day from the previous week to a record weekly high of 13.2M bbl/day, the EIA reported, beating the previous peak of 13.1M bbl/day set during the week ended March 13, 2020.

Record production, lower exports and the peak of autumn refinery maintenance combined to cause “a whopper of a build” to crude inventories, Kpler analyst Matt Smith said.

Front-month Nymex crude (CL1:COM) for November delivery finished -0.7% to $82.91/bbl, capping a 4% loss during the past three days, while December Brent crude (CO1:COM) closed +0.2% to $86.00/bbl.

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The International Energy Agency said Thursday it now expects oil demand to increase by 2.3M bbl/day this year – up 100K from last month’s report – resulting in total demand averaging a new record high 101.9M bbl/day.

The IEA also noted a “sharp escalation in geopolitical risk” to oil supplies due to the Israel-Hamas war.

In its latest monthly report, OPEC maintained its forecast for the global oil market, forecasting a rise in oil demand of 2.4M bbl/day this year and another increase of 2.2M bbl/day in 2024.