(Reuters) - U.S. crude oil stockpiles rose last week as production surged, posting its largest one-week increase ever, while gasoline and distillate inventories fell, the Energy Information Administration said on Wednesday.
Crude inventories USOILC=ECI rose by 4.3 million barrels in the week to Oct. 23 to 492.4 million barrels, much more than analysts' expectations in a Reuters poll for a 1.2 million-barrel rise.
Production surged to its highest since July at 11.1 million barrels per day in a record weekly increase of 1.2 million bpd. Some of that was due to offshore facilities coming back online after Hurricane Delta.
Analysts worried that the surge could lead to an inventory glut, particularly as Libya is again ramping up supply and the Organization of the Petroleum Exporting Countries is considering easing off its current production curbs.
“Crude oil domestic production number is up a crazy amount. That’s not good, as it implies we will have a lot of crude oil for a long time coming out of the ground,” said Robert Yawger, director of energy futures at Mizuho.
Those facilities are shutting again due to Hurricane Zeta, slated to hit the U.S. Gulf Coast later this week.
“We have another hurricane coming in and we have to deal with more Libyan crude supply,” said Phil Flynn, analyst at Price Futures Group.
Those shut-ins will be temporary, however, while the steady rise in operating rigs in the United States while numerous nations again restrict movements due to rising coronavirus infections are raising the specter that the supply-demand imbalance will worsen swiftly.
Oil prices fell, hit by lockdowns in Germany and France. The market modestly pared losses after the EIA figures, with U.S. crude CLc1 down 4.9%, or $1.93 a barrel, to $37.64 a barrel. Brent LCOc1 dropped 4.3% to $39.41 a barrel.
Fuel demand remains lackluster. Overall gasoline supplied, a measure of demand, is down 10% from the year-over-year period, the EIA said.
“The poor gasoline demand figures compared to last year over the last couple of weeks have added further bearish sentiment into the market. The stats were just one more piece of information that the demand recovery is stalling,” said Andy Lipow, president of consultants Lipow Oil Associates.
U.S. gasoline stocks USOILG=ECI fell by 892,000 barrels in the week to 226.1 million barrels, the EIA said, in line with expectations. Distillate stockpiles USOILD=ECI, which include diesel and heating oil, fell by 4.5 million barrels.
Reporting By David Gaffen; Editing by Marguerita Choy
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