Oil futures dropped for a third consecutive trading session on Wednesday, hitting four-month lows as concerns persist over potential OPEC+ production increases. Meanwhile, official data revealed that US crude inventories rose by nearly 1.8 million barrels last week.
Oil prices have been under pressure this week following reports that OPEC+ may agree at Sunday's meeting to increase November oil production by up to 500,000 barrels per day, triple October's increase, intensifying worries about supply oversupply.
"Any increase in global oil supply would be viewed by traders as significantly bearish," said Dennis Kissler, analyst at BOK Financial.
Data from the Energy Information Administration (EIA) showed commercial crude inventories, excluding the Strategic Petroleum Reserve, increased by 1.8 million barrels from the previous week, far exceeding analysts' forecast of 300,000 barrels, further amplifying oversupply concerns.
The EIA reported gasoline inventories rose 4.1 million barrels from the previous week, while analysts had generally expected inventories to remain flat. Distillate inventories increased by 600,000 barrels, contrary to analysts' prediction of an 800,000-barrel decline.
Additionally, uncertainty from the US government shutdown has dampened market sentiment.
Macquarie predicts oil prices will fall to the $50 range in coming quarters due to worsening oversupply conditions from increased production. The firm currently expects 2026 WTI crude to average around $57 per barrel, down from its previous forecast of $60 per barrel.
November-delivery light crude futures on the New York Mercantile Exchange closed down 0.9% on Wednesday at $61.78 per barrel, the lowest closing price since May 30. December-delivery Brent crude futures closed down 1% at $65.35 per barrel, the lowest closing price since June 5.
November-delivery natural gas futures on NYMEX rose 5.2% to $3.476 per million British thermal units, reaching the highest closing price since July 18.
BOK Financial noted that weather models show heating degree days increased by as many as 17 days, indicating natural gas consumption will exceed previous expectations.