Oil prices were little changed in volatile trade on Wednesday as strong U.S. demand for fuel helped offset a sixth straight week of crude builds and evidence of rising global supply despite sanctions that are already curbing Iranian crude exports.
The Brent crude December LCOc1 futures contract, which expires Wednesday, fell 21 cents to $75.70 a barrel by 1:23 p.m. EDT (1723 GMT). The more-active January contract LCOF9 rose 1 cent to $75.96 a barrel.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 10 cents to $66.08 a barrel.
Both benchmarks were about $10 a barrel below four-year highs reached on Oct. 3. Both contracts are on track for their worst monthly performance since July 2016, with Brent set to fall 8.5 percent for the month and WTI on course to drop 9.8 percent.
Oil prices gained after the U.S. Energy Information Administration said crude inventories USOILC=ECI rose 3.2 million barrels last week, less than expected. Gasoline and distillate stockpiles fell as total product demand over the past four weeks rose 5.4 percent from a year ago.
“The report was modestly supportive due to the decent sized drawdowns in refined products, and the strong demand for them,” said John Kilduff, a partner at Again Capital Management in New York.
Crude futures traded choppily on Wednesday, with Brent rising by $1 a barrel earlier in the session before retreating. Investors are weighing market sentiment ahead of new U.S. sanctions on Iran that begin on Nov. 4.
“There’s this perception that there’s enough oil in the market right now to get through the Iranian sanctions. Technically the market has been in a weak position,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Washington has made it clear to Tehran’s customers that it expects them to stop buying any Iranian crude oil from that date.
Imports of Iranian crude by major buyers in Asia hit a 32-month low in September as China, South Korea and Japan sharply cut their purchases ahead of the sanctions, government and ship-tracking data showed.
But oil supply from other countries is rising.
The top three producers - Russia, Saudi Arabia and the United States - pumped 33 million barrels per day (bpd) in September, Refinitiv data showed, an increase of 10 million bpd since the start of the decade.
Russian oil output has reached 11.41 million bpd, a level unseen since the collapse of the Soviet Union in 1991, an industry source told Reuters.
Oil market sentiment received some support from equity markets, which pulled back from 20-month lows after pledges by China to support its markets.
Oil has been caught in the global financial market slump this month, raising concerns about global oil demand. Equities have been under pressure from the trade war between the world’s two largest economies, the United States and China.
The United States has already imposed tariffs on $250 billion worth of Chinese goods and China has responded with retaliatory duties on $110 billion worth of U.S. goods.