The increase in USA crude oil stocks worked to push the price of oil lower, as it showed a larger-than-expected rise at a time when fears are rising that oil stocks will decline in the coming months, once the November implementation of the U.S. sanctions on Iranian oil exports is fully in place.
Exerting downward pressure on prices, Friday's monthly report from the International Energy Agency said the market looked "adequately supplied for now" and cut its forecasts for world oil demand growth this year and next.
US oil production has increased steadily over the last five years, reaching a record high of 11.2 million bpd in the week to October 5.
Saudi Arabia and Kuwait will struggle to resume oil production from jointly operated fields that produced some 500,000 bpd any time soon due to operational differences and souring political ties, sources said on Wednesday.
"We are seeing a well-supplied and balanced oil market right now".
Even though the sanctions haven't yet been imposed, exports from Iran have already slid, slipping to a 2 1/2-year low in September. But the government there is now under fire amid concerns that it might have been responsible for the death of journalist Jamal Khashoggi at the Saudi consulate in Istanbul earlier this month.
Observed shipments of crude and condensate dropped to 1.72mn bpd, down 260,000 barrels from the previous month, according to ship-tracking data compiled by Bloomberg.
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Inventories rose sharply even as USA crude production slipped 300,000 bpd to 10.9 million bpd last week, which analysts attributed to the effects of offshore facilities closing temporarily for Hurricane Michael.
Data from the American Petroleum Institute (API) is due at 4.30pm EDT (2030 GMT) while the US Department of Energy will release official data at 10.30am EDT (1430 GMT) on Wednesday.
Oil minister Dharmendra Pradhan indicated on Tuesday that the U.S. sanctions on Iran is not about availability of crude oil but a "sentiment" issue which along with other factors is driving the prices higher.
He noted that US President Donald Trump thinks that he can decrease oil prices through bullying oil producers, and said the shortage in the crude market will not disappear by words.
He said the developments show that the United States "will definitely not be able to cut Iran's oil exports to zero" - the goal set by USA officials - when sanctions targeting the oil sector go into effect on November 5.
West Texas Intermediate for November delivery tumbled $2.17 to settle at $69.75/bbl on the New York Mercantile Exchange, the lowest level in a month.
Oil traded near the lowest level in a month after a more-than-expected gain in American stockpiles overshadowed tensions between the USA and Saudi Arabia over a missing critic of the kingdom.