Oil futures edged lower Thursday, as the latest data showed a sizeable increase in crude oil production from major producers experiencing problems with oversupply.
Crude oil production in Saudi Arabia, Russia and the US has risen ahead of US sanctions on Iran's energy sector, which is expected to contribute to tighter global oil supplies. Sanctions began earlier this week, but the US gave eight countries temporary relief – allowing them to continue buying Iranian oil.
Meanwhile, data showing strong crude oil imports by China in October helped limit losses in oil prices.
West Texas Intermediate crude for December delivery
on the New York Mercantile Exchange fell 55 cents, or 0.9%, to $ 61.12 a barrel, a day after closing at almost eight-month lows. January Brent crude
lost 40 cents, or 0.5%, at $ 71.67 per barrel on ICE Futures Europe.
US production rose by 400,000 barrels per day to 11.6 million barrels per day for the week ended November 2, the Energy Information Administration said in its weekly oil supply report released Wednesday.
That marked a record high, and "the rate of increase was the highest since October last year when Hurricane Nate occurred [1 million barrels a day] Gulf production will come offline and then quickly return, "said Tyler Richey, co-editor of the Sevens Report. "But unlike last October, there were no special conditions for this large production surge."
The EIA report also revealed the seventh consecutive weekly increase in US crude oil inventories, up 5.8 million barrels last week.
Weekly output data follows an updated estimate from EIA released on Tuesday, which raises the views of 2018 and 2019 on domestic crude oil production. For 2019, the government expects an average production of 12.06 million barrels per day.
While concerns about previous Iranian sanctions have served to increase oil prices, an October faint partly reflected expectations that an increase in production by Saudi Arabia and Russia would largely offset the missing barrels.
Saudi Arabia's production rose to 10.67 million barrels per day in October, according to the S & P Global Platts survey Wednesday. That was the largest in the history of 30 years of the survey, which also showed that the Organization of the Petroleum Exporting Countries' output in October fell by 30,000 barrels to 33.04 million barrels per day.
Russian crude oil production rose to a post-Soviet record of 11.4 million barrels per day in October, according to Bloomberg.
"While the focus is on the embargo on Iran and Venezuela's output struggling over the past few months, namely the risk of too little supply, the market increasingly looks concerned with the prospect of too much supply," said Norbert Ruecker, head of macro and commodity research at Julius Baer, in a note.
"Petro countries under the leadership of Saudi Arabia and Russia have opened their taps, war-torn Libya, which has been shocked by strong exports lately, and pipeline congestion does not seem to be a temporary obstacle for the US. shale boom, "he said.
Meanwhile, Chinese government data showed the country imported 9.61 million barrels of crude oil per day in October, leading analyst at Commerzbank, after refinery processing rose to a record in September, showed an increase in demand for crude oil.
Last month's sell-off in crude oil may have been used by Chinese refineries to stock up on Iranian oil before US sanctions began to bite, they said, noting Bloomberg data showing Iranian oil shipments to China rose to 741,000 barrels per day last month – second-level highest this year.
In other energy trade, gasoline in December
RBZ8, + 0.10%
rose 0.7% to $ 1.659 a gallon, while heating oil December
fell almost 2.3% to $ 2.187 per gallon.
Natural gas futures declined after EIA reported on Thursday a larger-than-expected increase of 65 billion cubic feet for the week ended November 2.
December natural gas
down 1.2% to $ 3,511 per million British thermal units.
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