Oil prices fall on global rising supply signs

NEW YORK (Reuters) – Oil prices fell on Wednesday and posted the worst monthly performance since mid-2016 on the rise of global crude oil supply, but losses were limited by US demand for fuel.

The Brent crude December LCOc1 futures contract, which expired Wednesday, fell 44 cents to settle at $ 75.47 a barrel. The most-active January contract LCOF9 fell 91 cents to settle at $ 75.04 a barrel.

West Texas Intermediate (WTI) crude CLc1 futures fell 87 cents to settle at $ 65.31 a barrel.

These benchmarks were more than $ 10 a barrel below the year-highs reached on Oct. 3. They both posted their worst monthly performance since July 2016, with Brent falling 8.8 percent for the month and WTI dropping 10.9 percent.

Investor sentiment across risky asset classes, such as equities and energy, turned negative during U.S.-China trade tensions sparked demand worries.

Weighing on market sentiment on Wednesday were signs of rising global output. U.S. crude oil production surged by 416,000 barrels per day (bpd) to a record 11,346 million bpd in August, the U.S. Energy Information Administration said.

The United States and other top producers Russia and Saudi Arabia pumped 33 million barrels a day in September, Refining data showed, an increase of 10 million bpd since the start of the decade.

Russian oil output has reached 11.41 million bpd in October, an unseen level since the collapse of the Soviet Union in 1991, an industry source told Reuters.

The increases in production comes just ahead of new sanctions on Iran, set to come into force Nov. 4, that are expected to cut supply.

"There's this perception that there's enough oil in the market right now to get through the Iranian sanctions," said Phil Flynn, analyst at Price Futures Group in Chicago.

Washington has made it clear to Tehran's customers that it expects them to stop buying Iranian crude oil from that date.

However, on Wednesday U.S. national security adviser John Bolton said that while the United States wants to apply maximum pressure to its sanctions on its crude exports, it does not want to harm countries that are allies that depend on the oil.

Imports of Iranian crude oil by major buyers in Asia hit the flag of China, South Korea and Japan.

Earlier in the session, obtained after the U.S. Energy Information Government said crude inventories USOILC = pink ECI 3.2 million barrels last week, less than expected. Gasoline and distillate stockpiles fell as total revenue rose 5.4 percent from a year ago. [EIA/S]

"Bullish draws to bearish sentiment," said Matt Smith, director of commodity research at ClipperData.

Oil market sentiment, which pulled back from 20-month lows after pledges by China to support its markets.

Equities have been under the world's largest economies, the United States and China. The United States has imposed tariffs on $ 250 billion worth of Chinese goods and China has responded to $ 110 billion worth of U.S. goods.