CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent on the Intercontinental Exchange were down sharply early Thursday, continuing Wednesday's selloff ahead of weekly supply data from the Energy Information Administration, and following a downward revision in world oil demand expectations by the Organization of the Petroleum Exporting Countries.
A drubbing in equities, with the Dow Jones Industrial Average tumbling 831.83 points Wednesday and expected to add to the losses today on worry over rising interest rates, contributed to selling in oil futures on concern over global oil demand.
Rallying crude prices earlier this month prompted concern that high oil prices would dent demand. This morning, OPEC released its Monthly Oil Market Report in which the 15-country producer group revised down projected world oil demand for this year by 80,000 barrels per day (bpd) to 98.79 million bpd for year-on-year growth of 1.54 million bpd, and for 2019 by 50,000 bpd for an annual growth of 1.36 million bpd.
OPEC also revised higher non-OPEC oil supply growth by 20,000 bpd to 2.22 million bpd for this year, with non-OPEC output projected at 59.77 million bpd in 2018. In 2019, non-OPEC supply growth is projected at 2.12 million bpd.
OPEC crude production increased 132,000 bpd in September to a 14-month high at 32.761 million bpd according to secondary sources cited in the monthly report. Iran's crude production rate tumbled 150,000 bpd to a two-year, six-month low at 3.447 million bpd, and Venezuelan output fell 42,000 bpd to 1.197 million bpd.
A 108,000 bpd increase in crude production from Saudi Arabia to 10.512 million bpd, the highest output rate by the kingdom since November 2016, and a 103,000 bpd monthly gain in Libya crude production to 1.053 million bpd drove the advance in OPEC output last month.
Late Wednesday afternoon, the American Petroleum Institute released its weekly report showing a massive 9.7 million barrel (bbl) build in commercial crude stocks for the week-ended Oct. 5 that was nearly four times market expectations, and the largest build since February 2017. A 2.3 million bbl increase in stocks held at the Cushing tank farm in Oklahoma, the delivery location for NYMEX West Texas Intermediate futures, was part of the national build. API reported a 3.4 million bbl increase in gasoline stocks and a 3.5 million bbl draw from distillate stocks.
The EIA will release its weekly supply report at 11 a.m. EDT.
Oil futures are accelerating their decline in morning trading, with NYMEX November WTI futures down about $1.35 near $71.80 bbl, and ICE December Brent $1.65 lower near $81.45 bbl. NYMEX November ULSD futures were 4.3 cents lower near $2.3525 gallon, and November RBOB futures were down 4.75 cents at $1.9725 gallon.
Brian L. Milne can be reached at email@example.com
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