Shafaq News/ Oil prices fell more than 1% on Wednesday on a bigger-than-expected rise in U.S. crude inventories and record production in the world's biggest producer, along with mounting worries about demand in Asia.
Brent futures were down $1.03 to $81.43 a barrel at 1:35 p.m. ET (1835 GMT). U.S. West Texas Intermediate crude (WTI) was down $1.33 at $76.90.
WTI's front month contract was also lower than the second month, or in contango, for the first time since July. Prices for oil six months ahead also looked poised to rise above front month contract.
U.S. crude stocks rose by 3.6 million barrels last week to 421.9 million barrels, according to the U.S. Energy Information Administration (EIA), far exceeding analysts' expectations in a Reuters poll for a 1.8 million-barrel rise.
The weekly government data, which was not published last week due to systems upgrade, also showed that U.S. crude production was still holding at a record 13.2 million barrels per day that it hit in October.
"U.S. supply activity is headwind for the market, and U.S. is a problem for OPEC+," said John Kilduff, partner at Again Capital LLC in New York, adding that he does not think Saudi Arabia can cut more output to boost prices.
Top oil exporters Saudi Arabia and Russia, part of OPEC+ group comprising of the Organization of the Petroleum Exporting Countries and its allies, said this month they would continue with their additional voluntary oil output cuts until the end of the year.
In an indication of strong demand, U.S. gasoline stocks saw a surprise draw of 1.5 million barrels last week, while diesel inventories fell more than expected at 1.4 million barrels.
The International Energy Agency on Tuesday joined OPEC in raising oil demand growth forecasts for this year, despite projections of slower economic growth in many major countries.
China's oil refinery throughput eased in October from the previous month's highs as industrial fuel demand weakened and refining margins narrowed. Still, its economic activity perked up in October as industrial output increased at a faster pace and retail sales growth beat expectations.
Japan's economy contracted in July-September, snapping two straight quarters of expansion on soft consumption and exports.
U.S. retail sales also fell for the first time in seven months in October.
Meanwhile, European Union diplomats said Russian oil tankers are not targeted in the European Commission's proposal for tightening the implementation of a price cap on the country's crude oil.
The Financial Times reported earlier that Denmark will be tasked with inspecting and potentially blocking Russian tankers sailing through its waters under new EU plans as a way of enforcing a $60 per barrel price cap on Moscow's crude.
(REUTERS)