Brent futures hover near $90, pressured by rise in US crude inventories

Oil prices extended gains on Wednesday as investors worried about supply disruptions from a worsening geopolitical landscape, although a surprise jump in U.S. crude oil inventories eased some of those concerns.

Brent crude futures rose 84 cents, or 0.9%, to $89.76 a barrel by 11:38 a.m. ET (1538 GMT). U.S. West Texas Intermediate futures rose 76 cents, or 0.9%, to $85.91 a barrel.

Both contracts were up more than a dollar during the session, before the U.S. Energy Information Administration reported a 3.2 million barrel increase in crude stocks. Analysts polled by Reuters had expected an over 1.5 million barrel decrease which was in line with preliminary data reported by the American Petroleum Institute on Tuesday.

“The EIA report went in the other direction on crude oil from what the API reported yesterday so that has helped pause the rally a little bit,” said Bob Yawger, director of energy futures at Mizuho.

Technical indicators also helped cap oil’s gains, with both Brent and WTI futures indicating the contracts have become overbought.

“We needed a little bit of a pullback to reload before gunning higher again. Other than being overbought, market fundamentals continue to point upwards,” he said.Brent and WTI futures have traded at over five month highs for three consecutive sessions, rallying on concerns that Ukraine’s recent attacks on Russian refineries and potential widening of the conflict in the Middle East could impact oil supplies.Iran has vowed revenge against Israel for an attack on Monday that killed high-ranking military personnel. Iran, which provides support for the Hamas militia fighting Israel in Gaza, is the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).

Bank of America Global Research raised its 2024 Brent and WTI forecasts to $86 and $81 a barrel respectively, it said in a note on Wednesday, on firming demand and escalating political tensions.

Meanwhile, a meeting of the top OPEC+ ministers on Wednesday kept oil output policy unchanged and pressed some countries to boost compliance with output cuts.

“Low inventories across the oil complex, OPEC+ output cuts, geopolitical tensions, and robust economic growth figures have flipped price trends and now point to a tighter-than-expected summer driving season, supporting firm backwardation in crude and products,” it said.