Crude Oil Prices Settle 2.5% Lower as OPEC Output Jumps

Investing.com – WTI crude oil prices settled lower Thursday, as OPEC’s biggest monthly jump in output in more than two years cooled concerns about a possible oil supply shortage, while fears of a trade war denting demand also weighed.

On the New York Mercantile Exchange for October delivery fell 2.5% to settle at $68.62 a barrel, while on London’s Intercontinental Exchange, fell 1.7% to trade at $78.35 a barrel.

Crude oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million barrels a day, the International Energy Agency said.

That was biggest monthly rise in more than two years and “far outweighed losses from Iran ahead of U.S. sanctions,” the agency said, casting doubt on suggestions the cartel would struggle to replace the potential drop in Iranian exports.

On the demand side, the agency warned that oil-demand growth could come under pressure as a stronger greenback could raise the cost of importing energy, forcing emerging market countries to scale back crude purchases.

The international energy watchdog also cited an “escalation of trade disputes” as another headwind to demand growth.

The steep fall in crude prices more than offset gains from a day earlier, following a report showing a larger-than-expected drop in domestic crude stockpiles.

Inventories of U.S. crude fell by 5.296 million barrels for the week ended Sept. 7, beating expectations for of 1.300 million barrels, according to data from the Energy Information Administration (EIA).

The large draw in crude supplies comes as imports fell by about 0.443 million barrels per day (bpd), while exports declined by 0.320 million bpd, data from EIA showed.

Oil-market observers will likely turn to the Baker Hughes rig count data Friday for ongoing signs of tightening U.S. output, which fell to 10.9 million barrels a day last week.

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