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Crude oil futures slump more than 1% on US stock build, EIA report

Singapore — Crude oil futures were lower in mid-morning trade in Asia Thursday after a larger-than-expected build in US crude stocks and a bearish US production and demand forecast.

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At 10:30 am Singapore time (0230 GMT), December ICE Brent crude futures were down $1.21/b (1.46%) from Wednesday's settle at $81.88/b, while the NYMEX November light sweet crude contract was down 89 cents/b (1.35%) at $72.18/b.

US crude inventories rose 9.75 million barrels in the week ended October 5, according to data released by the American Petroleum Institute to analysts Wednesday.

"The biggest build since February 2017," The PRICE Futures Group analyst Phil Flynn said in a note.

Analysts surveyed Monday by S&P Global Platts had been expecting a more modest 1.61 million-barrel build.

The API also reported US gasoline inventories were up 3.4 million barrels in the week ended October 5, while US distillate inventories were down 3.5 million barrels, analysts said.

The official report on last week's US inventory levels is due for release by the US Energy Information Administration later Thursday.

Prices were also pressured down Thursday by bearish factors reported in the EIA'S Short-Term Energy Outlook released Wednesday.

"A bearish EIA monthly report, along with a risk-off tone of the market, weighed on crude oil prices," ANZ analysts said in a note Thursday.

EIA raised its forecast for US oil output to an average 10.74 million b/d in 2018 and 11.76 million b/d in 2019, up 80,000 b/d and 260,000 b/d respectively from last month's forecast.

It forecast US oil production, which crossed 11 million b/d in August, to exceed 12 million b/d by October 2019.

"On the other hand, US oil demand growth has been revised lower by 20,000 b/d to 450,000b/d," the ANZ analysts added.

The EIA noted that with increased global crude output in the third quarter, Saudi Arabia and Russia have been able to offset oil production declines from Iran and Venezuela, but OPEC's ability to further close an anticipated supply gap is fading quickly.

"OPEC spare capacity has dropped to levels not seen in about two years," EIA Administrator Linda Capuano said in a statement Wednesday.

Market participants are awaiting OPEC's monthly oil market report due for release Friday for further cues, analysts said.

As of 0230 GMT, the US dollar index was down 0.31% at 94.935.

--Avantika Ramesh, avantika.ramesh@spglobal.com

--Edited by Wendy Wells, wendy.wells@spglobal.com