By Dan Molinski and Sarah McFarlane
Oil prices fell by the most in two months Thursday because of a big increase in U.S. oil inventories, rising crude production from OPEC and broader-market moves away from riskier assets including crude oil.
Light, sweet crude for November delivery ended down 3% at $70.97 a barrel on the New York Mercantile Exchange, a nearly three-week low. The U.S. benchmark has fallen by $3.99 a barrel over the past two sessions, the largest two-day fall since July 7, 2015. Brent crude, the global benchmark, ended 3.4% lower at $80.26 a barrel.
The Energy Information Administration on Thursday reported a huge, six-million-barrel increase in U.S. stockpiles of crude oil during the week ended Oct. 5. That was four times the 1.5-million-barrel rise analysts expected, and put total U.S. crude oil inventories at 410 million barrels, the highest in nearly two months.
It also was the third consecutive weekly rise. And while oil inventories are expected to trend higher during the fall season when demand is low and refineries partially shut for maintenance, gasoline inventories also rose by nearly 1 million barrels last week, which suggests demand is even weaker than normal.
"Inventory data has served to kick crude when it's already down," said Matt Smith, director of commodity research at ClipperData. "Another build to crude stocks at a time when prices were already getting swept up in the risk-off sentiment of broader markets."
Also Thursday, the Organization of the Petroleum Exporting Countries issued its closely watched monthly oil-market report, which showed OPEC and its ally Russia increased crude-oil production in September.
OPEC output was 32.76 million barrels a day last month, up 132,000 barrels a day from August, while Russia increased production by 150,000 barrels a day to reach a post-Soviet record of 11.54 million barrels a day, the OPEC report said.
"The monthly oil-market report from OPEC showed its members are making up the shortfall from Iranian crude exports," said Alfonso Esparza, senior analyst at foreign-exchange trading group Oanda
Looming U.S. sanctions have caused Iranian oil exports to decline more quickly than many had expected in recent weeks, pushing oil prices toward four-year highs late last month. That led President Trump on Sept. 20 to urge OPEC to increase output so prices could fall. "The OPEC monopoly must get prices down now!" Mr. Trump said on Twitter.
Meanwhile, sharp declines in stocks on Wall Street for a second day also were pressuring oil prices Thursday.
"The de-risking that we saw in equity markets swept other markets with it, including oil," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
Prices also have declined this week after the International Monetary Fund cut its forecasts for global economic growth for both this year and next, citing trade protectionism and instability in emerging markets. A slowdown in economic growth would likely crimp oil demand, which analysts say is already at risk from rising oil prices.
On a fundamental basis, however, many say the overall bullish picture for oil remains intact, with further losses of production from Iran and Venezuela expected. Plus, any economic slowdown is unlikely to occur so quickly as to adversely impact oil demand in the near term, Mr. Tchilinguirian said.
Helping to limit losses were ongoing, upward revisions to the volume of Iranian oil expected to be lost from the global market when U.S. sanctions on Iran are reinstated on Nov. 4.
Among refined products, gasoline futures for November delivery fell 4.3% to $1.9327 a gallon. Diesel futures fell 2.6% to $2.3322 a gallon.
--Christopher Alessi contributed to this article.
Write to Dan Molinski at Dan.Molinski@wsj.com and Sarah McFarlane at email@example.com