Oil prices fall as IEA data reveal rise in output among OPEC members

Getty Images Global supply hit a record in August, says the IEA

Oil futures fell in early Thursday trade as a report showed production among OPEC members surged in August, pushing global inventories to a record.The International Energy Agency in a closely followed monthly report said daily 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 a day. That output more than made up for an expected decline in Iranian supply due to extant and pending U.S. economic sanctions. The August report also signaled that global supplies hit a record of 100 million barrels a day. October futures on West Texas Intermediate crude CLV8, -2.29% the U.S. benchmark, fell 93 cents, or 1.3%, to $69.44 a barrel, a day after marking the highest settlement since July 20, according to Dow Jones Market Data. November Brent LCOX8, -1.71% gave up 56 cents, or 0.7%, to $79.17 a barrel on ICE Futures Europe. Wednesday’s settlement for the global benchmark was the highest since May. The IEA’s report reflects monthly data from OPEC on Wednesday which also showed that members of the oil cartel boosted total output last month. The IEA report comes after the Energy Information Administration on Wednesday revealed that domestic U.S. crude supplies fell by 5.3 million barrels for the week ended Sept. 7. Analysts surveyed by S&P Global Platts had forecast a fall of 2.7 million barrels, while the American Petroleum Institute on Tuesday reported a drop of 8.6 million barrels. “The IEA left global oil demand growth unchanged at 1.4 million [barrels per day] for 2018 and 1.5 million bpd for 2019,” wrote Robert Yawger, director of energy at Mizuho USA, in a Thursday research note. “The IEA warned of higher oil prices as Iran and Venezuela losses deepen, and Brent’s $70 to $80 trading range may be tested by tightening,” he wrote. Concerns about expected disruptions to supply have underpinned recent crude-price gains. Renewed U.S. sanctions on Iran that take full effect in early November are expected to sharply curtail exports by the Middle Eastern nation. However, the moves from crude may be stalling out after the IEA report highlighted the ramp-up in global supplies and OPEC’s largest month-on-month increase in more than two years, bringing the supply from the group’s 15 producers to a nine-month high. The increase mainly came from higher production in Libya, Iraq, Nigeria and Saudi Arabia—the de facto head of OPEC. Market participants also have been watching Hurricane Florence, which was downgraded over the Atlantic Ocean late Wednesday to a Category 2 storm. Even so, it is expected to remain an “extremely dangerous major hurricane” when it nears the coast late Thursday and Friday, according to the National Weather Service. The storm, which is on track to disrupt the Carolinas and Virginia, has the potential to cause disruptions to the flow of fuel through the key Colonial Pipeline, which moves gasoline and diesel from Houston through states in the Southeast, including the Carolinas, to Linden, N.J.