Oil slips after U.S. output hits a new record, stocks rise

Oil prices fell on Wednesday, continuing their recent slide after surging U.S. crude output hit another record and domestic inventories rose more than expected. In early trade, prices had risen after a report that Russia and Saudi Arabia are discussing whether to cut crude output next year. Then the U.S. Energy Information Administration reported that domestic crude inventories rose 5.8 million barrels in the latest week, more than double analysts’ expectations.

Crude output hit 11.6 million bpd, a weekly record, though analysts will watch to see if monthly data confirms that. U.S. crude futures CLc1 fell 65 cents to $61.57 a barrel as of 11:17 a.m. EST (1617 GMT). That is down nearly 20 percent from a peak close of $76.41 a barrel in early October. “The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative,” said Phil Flynn, analyst at Price Futures Group in Chicago. Brent crude LCOc1, the global benchmark, fell 49 cents to $71.64 a barrel.

While Iranian oil exports are expected to fall after U.S. sanctions took effect on Monday, reports from OPEC and other forecasters have indicated the global oil market could have a surplus in 2019 as demand slows. Russia and Saudi Arabia, the top producers in an OPEC-led alliance, started bilateral talks on a return to production cuts next year, Russia’s TASS news agency reported, citing an unnamed source. In June, the producer group decided to relax output curbs in place since 2017, after pressure from U.S. President Donald Trump. Analysts said those countries may be more willing to cut output now that the U.S. midterm elections are over. Trump, whose Republican party was fighting to retain control of congress, had complained of higher gasoline prices.