West Texas Intermediate futures were down 21 cents at $42.83 per barrel after the US crude rose to $43.30 earlier the session.
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The US Energy Information Administration said crude oil stocks across the country rose by 961,000 barrels last week.
“The well supplied crude market, record high inventories in OECD and lack of material threat to oil facilities in the Middle East from the military escalation against IS in Syria are going to prevent geopolitical premiums building in oil prices, ” BMI said in a note.
Turkey said it had downed a Russian-made fighter jet near the Syrian border after it violated Ankara’s airspace, the first time a North Atlantic Treaty Organisation member has downed a Russian or Soviet military aircraft since the 1950s.
“US crude oil inventories are not increasing as much as before, so this is giving the market some bullish sentiment”, said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
Middle East tensions have already been heightened by Russian air raids over Syria to punish those it blamed for the downing of a Russian passenger jet over Egypt last month.
The trouble in the world’s most prolific oil-producing region caused oil prices to rally close to 3%, but many say it is less important because oil supply is so strong around the world.
Analysts told the FT the large short position was making some market participants nervous due to memories of a similar spike in August, when oil rose by 29% in less than a week.
He said traders are setting their sights on a meeting on December 4 of the Organisation of the Petroleum Exporting Countries for signs on whether the cartel will slash high production levels which have depressed prices in an oversupplied market. The volume of all futures traded was about 75 percent below the 100-day average.
Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.
WTI Crude Oil is expected to see 1st resistance at 43.59, a break there could drive it to next resistance at 44.32.
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“Global oil output will probably grow by about 1mln barrels per day (bpd) compared to 2014, whilst USA natural gas production is up 7.5% despite the number of drilling rigs being cut sharply”, Capital Economics continued.
