NEW YORK (Reuters) – Oil prices were little changed on Wednesday as rising political tensions in the Middle East offset U.S. government data showing an increase in domestic crude production and a surprise build in stockpiles.
U.S. crude production rose to 9.6 million barrels per day during the week of Nov. 3, the most in a week on record according to the Energy Information Administration (EIA) data going back to 1983.
“The most notable thing in the EIA report was that production increased. We’re on our way to set record crude oil production in 2018,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
The EIA also said crude stocks increased by 2.2 million barrels. That compared with the 2.9 million-barrel draw forecast by analysts in a Reuters poll and the 1.6 million-barrel decline reported late Tuesday by the American Petroleum Institute.
Brent futures were down 4 cents, or 0.1 percent, at $63.65 a barrel by 11:24 a.m. EST (1624 GMT), while U.S. West Texas Intermediate crude was down 16 cents, or 0.3 percent, at $57.04 per barrel.
Before the EIA released the inventory data, Brent and WTI futures were down about 0.6 percent on data that showed Chinese crude imports fell to a one-year low.
China’s October oil imports fell to just 7.3 million bpd from a near record-high of about 9 million bpd in September, according to data from the General Administration of Customs.
That is the lowest level since October 2016, though imports were up 7.8 percent from a year ago.
Traders, however, said they were closely watching escalating tensions in the Middle East, especially between regional rivals Saudi Arabia and Iran.
Brent crude hit $64.65 earlier this week, its highest since mid-2015, as political tensions in the Middle East escalated after a sweeping anti-corruption purge in top crude exporter Saudi Arabia, which in turn has confronted Iran over the conflict in Yemen.
Brent futures have gained around 14 percent in the last month alone, propelled largely by evidence that OPEC’s efforts, together with those of its partners to curtail output, is helping erode a global overhang of unused crude.
“Stronger oil fundamentals and investor inflows have been the catalyst for higher oil prices, but adding further support now is a focus on several geopolitical risks that have been looming over oil markets for a while,” said analysts at Citi.
The Organization of the Petroleum Exporting Countries’ 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers.