WASHINGTON (DTN) -- Fading from intra-session highs, crude and product futures on the New York Mercantile Exchange and the Brent contract on Intercontinental Exchange settled mostly lower except for a modest gain posted by the ULSD contract after federal data reported another build in U.S. crude oil inventories and a record high production rate, feeding into concerns of an oversupplied market.
At settlement, NYMEX December West Texas Intermediate futures dipped $0.35 to a $56.77 per barrel (bbl) settlement, and the ICE January Brent contract was down $0.09 at $62.28/bbl. NYMEX December ULSD futures settled up 0.54 cents at $1.9179 per gallon and the December RBOB contract declined 2.07 cents to a $1.6158/gallon settlement.
Oil futures erased early gains after late-morning inventory data showed U.S. commercial crude supply jumped 2 million barrels (bbl) last week, contrasting with a drawdown reported by the American Petroleum Institute late Wednesday. After a string of seven weekly builds, U.S. crude supply have added more than 40 million bbl since early September, reigniting fears of an oversupplied domestic market. The crude build was realized even as refinery activity ramped up and oil exports rebounded following a steep drop in the last week of October.
Surprisingly, U.S. crude production continued to defy expectations, gaining a bearish 200,000 barrels per day (bpd) to a new record high of 12.8 million bpd, despite an ongoing decline in drilling activity.
Government data was mixed for refined products, detailing the first build in gasoline stocks in over a month and falling distillate fuel supply, that dropped about 10% below the five-year average. Demand for both fuel categories increased on the week.
Adding to oversupply concerns, the Organization of the Petroleum Exporting Countries (OPEC) reported Thursday its crude output rose 943,000 bpd in October to 29.65 million bpd, with most of the production gain taking place in Saudi Arabia, the cartel's largest member. According to OPEC's Monthly Oil Market Report, the Kingdom's output was up 1.094 million bpd to 9.89 million bpd, with production fully recovering from the Sept. 14 attack on its largest oil processing facility.
Crude production in Iraq remained above its 4.512 million bpd agreed-to quota under the OPEC+ agreement. Nigerian output was also more than terms the nation accepted under the OPEC+ accord, with production down 37,000 bpd to 1.811 million bpd.
Iranian output again declined in October, down 18,000 bpd to 2.146 million bpd, as U.S. sanctions on its oil exports continue to slow the Islamic Republic's output rate.
On the demand side, OPEC lowered its estimates for crude consumption to 30.7 million bpd, down 900,000 bpd from a year prior, and expects a further decline of 1.1 million bpd in 2020 to 29.6 million bpd.
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