Oil prices fell on Wednesday after OPEC reported another monthly hike in output and extended losses in post-settlement trade as industry data suggested the first U.S. crude inventory build in six weeks.
The Organization of the Petroleum Exporting Countries (OPEC) said its production rose in September to the highest in at least eight years. It also forecast a rise in 2017 non-OPEC supply.
The American Petroleum Institute (API), a trade group, said after the market settled that U.S. crude stockpiles rose by 2.7 million barrels in the week to Oct. 7. Analysts had expected an increase of 650,000 barrels.
U.S. West Texas Intermediate (WTI) crude
The API report came ahead of official inventory data due from the U.S. Energy Administration (EIA) on Thursday. It was a sign that domestic crude stocks had risen the first time since the start of September. Over the past five weeks, the EIA reported a 26 million-barrel decline in crude stocks."For sure, the fact that we could be getting draws again will take some of the attention away from what OPEC has been doing," said Kyle Cooper, a consultant at Houston-based ION Energy.
Oil prices had mostly risen for nearly two weeks now after the Saudi-dominated OPEC proposed to cut or freeze output with other major oil producers in time for its Nov. 30 policy meeting in Vienna. If carried out to plan, it will be the first output cap by OPEC since 2008 after a glut caused oil prices to crash from mid-2014 highs above $100.
OPEC's September report showed that it produced 33.39 million barrels per day, up 220,000 bpd from August, and as much as 890,000 bpd above the new supply target.
"Once again, it reinforces that their deeds are not matching their words, and that they have a great deal of work cut out for them to try and come to an agreement that will satisfy anything," said John Kilduff, partner at energy hedge fund Again Capital in New York.
Officials of some of the world's biggest oil trading companies told the Reuters Commodities Summit in London that crude was unlikely to achieve a supply-demand balance until well into 2017.