NEW YORK – Oil futures turned lower on Wednesday, pulling back after eight straight sessions of gains after US crude inventory data suggested that the market was still heavily supplied.
Traders focused on preliminary US production estimates in the weekly EIA report that suggested domestic output is still climbing. The report also showed stockpiles at the US crude hub at Cushing, Oklahoma, rose 276,000 barrels in the week.
Brent crude futures were down 30 cents at US$55.93 a barrel by 1:43pm EDT (1743 GMT), after hitting a one-month high of US$56.65.
US West Texas Intermediate (WTI) crude futures were down 20 cents at US$53.20 a barrel, after touching the highest since March 7 at US$53.76.
Both contracts had initially jumped to the highest in more than a month, the eighth straight session of gains, after Saudi Arabia was reported to be pushing fellow Opec members and some rivals to prolong supply cuts beyond June.
Analysts and traders said long-term fundamentals remained strong and more stockpile draw-downs are likely as refiners exit maintenance season.
“Crude inventories at Cushing rose 0.28 million barrels (mb) to 69.42 mb; however, this leaves just over 10mb of available storage before operational efficiency starts to be compromised,” Standard Chartered said in a note.
“We do not expect inventories to reach this point, particularly with the added downward pressure on Midwest inventories from the reduction in Canadian flows.”
The data showed an unexpected drop in overall US crude inventories, which fell in the week by 2.2 million barrels as imports declined by 717,000 barrels a day.
The US data followed bullish reports from Opec nations, which said they had cut March output beyond measures they had promised, according to figures the group published in a monthly report, as it sticks to an effort to clear a glut that has weighed on prices.
However, Opec also raised its forecast for supplies from non-member countries in 2017 as higher oil prices encourage US shale drillers to pump more, reducing demand for Opec’s oil this year.
Opec and other producers, including Russia, agreed late in November to cut output by around 1.8 million barrels per day in the first half of 2017 to rein in oversupply.
Fearing a loss of market share, Saudi Arabia is shielding its most important customers in Asia from the cuts, continuing to supply them with all contractual volumes.