Oil prices experienced a volatile day in the market, with Brent futures ending slightly higher while U.S. West Texas Intermediate (WTI) crude closed lower for a third consecutive day. The U.S. Energy Information Administration (EIA) reported a significant increase in U.S. crude stockpiles, marking the most substantial rise in eight months. This news followed a brief rally earlier in the day when oil prices had gained almost $2 per barrel.
The EIA reported that the U.S. crude inventory balance surged by 10.176 million barrels during the week to Oct. 6, which is the largest increase since mid-February when there was a weekly rise of 16.283 million barrels. This sharp increase contradicted expectations, as analysts had predicted a draw of 1.4 million barrels for that week. Additionally, the EIA reported that crude production reached 13.2 million barrels per day, a new record high, increasing by 300,000 barrels per day from the prior week.
The combination of record crude production and a drop in exports contributed to the bearish sentiment in the oil market, causing prices to settle lower. U.S. crude, WTI for November delivery, closed down 58 cents, or 0.7%, at $83.42 per barrel. Brent crude, the London-traded benchmark, for the most active December contract, settled up just 18 cents, or 0.2%, at $86 per barrel.
Despite this bearish news, the EIA report included some positive elements, with gasoline stockpiles falling, and distillate inventories extending their decline. Gasoline stockpiles dropped by 1.313 million barrels, while distillates fell by 1.837 million barrels.
In addition, the EIA reported a 0.319 million barrel drop in storage levels at the Cushing, Oklahoma delivery point for U.S. crude. This decrease followed a rise of 0.132 million barrels in the previous week, which was the first increase in months.
The combination of record crude production and a sudden drop in exports led to increased market volatility, as traders and investors digested these developments and their potential impact on the oil market.