Oil tumbles 2% on US inventory surge

Oil futures slumped in American trade as the dollar index rebounded from September 27 lows, after earlier US data showed a larger-than-expected increase in crude inventories. 

As of 05:05 GMT, US crude futures due in November fell 2.39% to $70.20 a barrel, while Brent December futures tumbled 1.57% to $80.13 a barrel, as the dollar index rose 0.34% to 95.37, marking October 10 highs. 

US Inventory Build 

The Energy Information Administration released its report on crude stocks, showing a buildup of 6.5 million barrels in the week ending October 12, adding to the 6 million increase in the previous reading, while analysts expected only a 1.6 million addition, with total stocks now up to 416.4 million barrels, 2% above five-year averages for this time of year. 

Gasoline stocks fell 2.0 million barrels, still 7% above five-year averages, while distillate stocks, including heating fuel, fell 0.8 million barrels, making them 3% below averages. 

Ad for the dollar side of the equation, earlier US data showed housing starts fell 5.3% in September to an annualized 1.201 million units, compared to a 7.1% surge in August, and edging estimates of a 5.6% drop. 

Building permits fell 0.6% last month to 1.241 million units, compared to a 4.1% decline in August, and missing estimates of a 2% increase. 

Federal Reserve Governor Lael Brainard will deliver a speech titled "Fintech and Financial Inclusion" at the Federal Reserve Bank of Boston's Fintech conference later today, while the Fed is slated to release its minutes for the September 25-26 meeting. 

US President Donald Trump accused the Federal Reserve of causing a sharp correction in markets with its interest rate policy, considering it too strict and a "mistake". 

Otherwise, OPEC General Secretary Muhammad Barkindo expected Indian oil demand to increase 3.7% by 2040 to 5.8 million bpd, representing 40% of global demand growth, while adding the oil sector requires investments of up to $11 trillion to meet future demand on oil. 

He noted that many consumers expressed concerns over supply shortages, as OPEC and allies continue to cut output according to a recent deal, while US sanctions Iranian exports. 

Otherwise, Saudi oil minister Khalid Al Falih asserted Saudi Arabia stands ready to fulfill Indian demand, noting that current production stands at 10.7 million bpd, with expectations of further increases next month. 

Iraqi oil minister Jabbar Alluaibi also said Iraq intends to raise output to 4 million bpd in the first quarter of 2019, adding that current exports stand at 3.62 million bpd, the highest ever. 

US Oil Rig Count 

Baker Hughes, a US services company, reported an increase of 6 in the oil rig count to 869 rigs, the first such addition in four weeks.

US output rose recently to 11.2 million bpd, almost surpassing Russia's 11.21 million bpd.