U.S. oil prices slipped on Wednesday after a surprising increase in U.S. crude inventories, while U.S. gasoline futures rallied 1 percent on a sharp falloff in inventories.
Brent crude edged up after top exporter Saudi Arabia reiterated its determination to end a three-year supply glut.
The deep draw in gasoline inventories came even as refining output rose, according to data from the U.S. Energy Information Administration. This suggested demand remained strong after the peak U.S. driving season.
Brent crude futures
The EIA data showed gasoline and distillate inventories both fell by more than 5 million barrels, and refinery utilization rates
"Demand has been a little stronger than some people might have anticipated as we pushed out of the driving season, and that`s where today`s strength is coming from," said Gene McGillian, manager of research at Tradition Energy in Stamford, Conn.
On Tuesday, Saudi Arabian Energy Minister Khalid al-Falih on Tuesday raised the prospect of prolonged output restraint even after the end of an OPEC-led pact to cut supplies.
Even as global inventory levels are falling, Brent has remained below $60 a barrel, partly on concern the crude glut may grow again after March 2018, when the output reduction deal is due to end.
The Organisation of the Petroleum Exporting Countries, Russia and other producers have cut oil output by about 1.8 million barrels per day (bpd). OPEC`s next meeting is on Nov. 7 in Vienna, Austria, when they will consider extending the deal.
While other producers cut output, U.S. production rebounded to 9.5 million bpd in the latest week. U.S. crude exports have averaged 1.7 million barrels a day over the past four weeks, the highest ever.
"Saudi Arabia`s determination to rebalance the market, together with ongoing geopolitical tensions in the Middle East, will remain supportive of oil prices," said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
"However, rising oil production in the U.S. and persistently high exports from the country will be the key bearish factors."
Disruptions to exports from Iraq, OPEC`s second-largest producer, have supported oil. Kurdish authorities on Wednesday offered to suspend their independence drive, but Baghdad said it would continue its offensive to retake Kurdish territory.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)