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Oil Prices Steady After Energy Department Reports Record Weekly U.S. Output Gain

Domestic oil production rose by a record 1.2 million barrels over the week ending October 23, the Energy Department said Wednesday.

Global oil prices pared declines Wednesday after Energy Department data showed a record rate of domestic production and a surprisingly large build-up in crude stocks.

The Energy Information Administration said U.S. crude stocks rose by 4.3 million barrels last week to 492.3 million barrels, a much bigger increase than the 1.2 million barrel gain analysts had anticipated. Gasoline demand, the EIA said, was pegged at 8.58 million barrels per day over the past four week, a 10.2% decline from the same period last year. 

Crude stocks at the key delivery hub in Cushing, Oklahoma, fell by 422,000 barrels, the EIA said, while imports rose by 122,000 barrels per day over the week ending on October 23 and production rates rose to 11.1 million barrels per day, the highest since July.

Last week's production gain of 1.2 million barrels per day, in fact, was the largest on record, the EIA said.

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Oil futures have been under heavy selling pressure for most of the Wednesday session, hit by both concerns for fading demand as COVID restrictions hit economic activity and a report last night from the American Petroleum Institute that showed a surprise increase of 584,000 barrels in domestic crude stocks.

"Rising Covid-19 cases and the implementation of restrictions in certain parts of the globe has clearly raised concerns over the recovery in oil demand" ING's head of commodity strategy Warren Patterson said in a recent client note. "Even the OPEC secretary-general yesterday (Monday) that the recovery for oil may take longer given the latest Covid-19 wave."

"There is still some time until the OPEC meeting at the end of November, however, if there is little improvement in the demand picture, there will likely be growing pressure on OPEC+ to rollover current cuts into next year," he added.

WTI contracts for December delivery, the new U.S. benchmark, traded $1.90 lower from their Tuesday close and were changing hands at $37.67 per barrel in mid-morning New York trading.

Brent contracts for December, the global benchmark, were seen $1.79 lower at $39.41 per barrel following the EIA data release.