Oil prices edged lower on Wednesday, after earlier hitting a 10-month high, as a surprise build in U.S. crude inventories offset expectations of tight crude supply for the rest of the year.
International benchmark Brent futures dipped 18 cents to settle at $91.88 a barrel. Its session high of $92.84 a barrel was the highest since November.
U.S. West Texas Intermediate crude (WTI) dropped 32 cents lower to $88.52. Its session high of $89.64 a barrel was also the highest since November.
Front-month Brent futures contracts traded as high as $4.90 a barrel above those for delivery six months further out <LCOc1-LCOc7>, the widest spread since November, indicating tightening supply.
A lack of big price moves in recent weeks has cut Brent’s historic or actual 30-day close-to-close futures volatility to its lowest since July 2021.
Prices gained despite government data that showed U.S. crude, gasoline and distillate inventories rose last week.
U.S. crude inventories rose by 4 million barrels last week, confounding analysts’ expectations in a Reuters poll for a 1.9 million-barrel drop.
“U.S. crude inventories have yielded a solid build despite refining activity increasing and Cushing, Oklahoma, inventories dropping to their lowest level this year, due to much higher net imports,” said Matt Smith, lead oil analyst for the Americas at Kpler.
Limiting price losses, Saudi Arabia and Russia have extended production cuts of 1.3 million barrels per day (bpd) of crude to the year end, which will lock in a substantial market deficit through the fourth quarter, the International Energy Agency (IEA) said.
The continuing supply cuts could lift Brent futures above the $100 a barrel threshold before the end of the year, Bank of America analysts said.
U.S. consumer prices rose in August by their most in more than a year, the Bureau of Labor Statistics said, driven by a 10.6% increase in retail gasoline prices.
Excluding volatile food and energy components, the consumer price index rose by 0.3%.
The U.S. Energy Department
has talked
to oil producers and refiners to ensure stable fuel supplies at a time of rising gasoline prices, Jared Bernstein, head of the White House Council of Economic Advisers, said on Wednesday.
Forecasters expect the European Central Bank to raise interest rates at its meeting on Thursday.
The IEA’s fourth-quarter world crude oil demand growth forecast, meanwhile, was revised down by 600,000 bpd in what Investec analyst Callum Macpherson said was a significant adjustment.
“The deficit is now broadly equal to the Saudi additional voluntary cut,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to its forecasts for robust growth in global oil demand in 2023 and 2024.
Four oil ports shut in by powerful storms in Libya reopened on Wednesday.