The oil rally faced a setback on Wednesday as U.S. oil production reached new three-year highs last week, and crude stockpiles increased for the first time in five weeks, marking the end of the peak summer driving season.
Brent crude settled at $91.88 per barrel, down 18 cents or 0.2%. The global crude benchmark had earlier reached $92.83 per barrel, its highest since November 2022.
West Texas Intermediate (WTI) crude, the U.S. benchmark, settled at $88.52, down 32 cents or 0.4%. WTI had reached a 10-month high of $89.64 earlier in the day.
The Energy Information Administration (EIA) reported that average daily oil output last week was estimated at 12.9 million barrels, the highest in three years. Until recently, U.S. crude output had ranged between 12.1 million and 12.2 million barrels per day.
Last week’s data means that U.S. oil production is now just 400,000 barrels short of the record high of 13.1 million barrels per day, which was averaged in March 2020, just before the COVID-19 pandemic hit and temporarily reduced energy demand.
U.S. crude oil stockpiles increased by nearly 4 million barrels last week, while fuel inventories also rose significantly, indicating lower demand as the summer driving season came to a close.
Gasoline inventories increased by 5.561 million barrels, distillate stockpiles rose by 3.931 million barrels, and crude oil stockpiles increased by 3.955 million barrels during the week ending September 8.
The increase in both crude and fuel supplies coincided with the end of summer driving in the United States after the Labor Day holiday on September 4. Refineries had previously drawn nearly 20 million barrels of crude from inventory over four weeks to meet demand during the summer.
Fuel demand also declined as the summer driving season ended, with total gasoline supplied to the marketplace falling to a daily average of 8.307 million barrels, below the typical daily mark of 9 million seen in off-peak periods.
U.S. crude exports decreased last week to 3.090 million barrels per day from the previous week’s 4.932 million barrels per day. However, crude imports grew as refiners anticipated increased demand.
U.S. crude imports averaged 7.6 million barrels per day last week, an increase of 0.812 million barrels per day from the previous week.
High fuel prices also contributed to a second consecutive monthly rise in U.S. consumer prices, reaching a year-on-year growth of 3.7%, which has put pressure on inflation fighters at the Federal Reserve.
U.S. headline inflation reached more than 9% in June 2022 before falling to as low as 3.0% by June of the following year. Since then, it has been on the rise, adding approximately 0.7% over the past two months, primarily due to high global oil prices increasing fuel costs at home.
