Oil prices dipped on Wednesday, weighed down by a report of rising U.S. crude inventories and an expected increase in production.
Despite this, prices remain near four-year highs reached earlier this week ahead of U.S. sanctions against Iran’s oil exports that kick in next month.
Consequently Brent crude oil futures traded at $84.73 per barrel down 7 cents from their last close, while the U.S. West Texas Intermediate (WTI) crude futures were down 10 cents at $75.13 a barrel.
U.S. commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Also, refinery crude runs fell by 158,000 barrels per day (bpd), API data showed.
Traders said the rising stocks were partly due to a relentless increase in U.S. crude oil production , which has jumped by a third since mid-2016 to a record 11.1 million bpd.
“We expect U.S. crude production to exit the year at 11.3 million bpd,” Barclays bank said in a note on Tuesday.
That would make the United States the world’s biggest crude oil producer ahead of Russia and Saudi Arabia.
Despite the rising U.S. supply, traders said global oil markets remained tense because of the looming U.S. sanctions against Iran’s oil exports that are scheduled to start from November 4.
Brent and WTI earlier this week both reached levels last seen in November 2014, and the two contracts have risen by around 20 and 17 percent respectively since mid-August.