U.S. West Texas Intermediate (WTI) crude futures rose 42 cents, or 1 percent, to $44.
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Brent crude oil futures fell by around 2 percent on Tuesday to $47.30 a barrel, still showing a 70-percent gain so far this year, but about half where it was two years ago.
USA inventories of distillates, which include diesel and heating oil, rose 4.6 million barrels last week, government data on Wednesday showed, much more than analysts had expected and the biggest weekly build since January.
Crude oil prices are also under pressure following EIA’s report of rising production volumes and declining demand.
However, traders focussed instead on news of rebounding reserves of gasoline, or petrol, and distillates which include diesel and heating fuel.
IEA distillates inventories for the week ended September 9 were up 4.62 million barrels versus 1.54-million-barrel-build estimate. USA gasoline inventories rose for the first time in six weeks.
Thirty-year USA yields held just below two-and-a-half-month highs at 2.49 per cent yesterday.
The drop in USA production came as the number of rigs drilling for oil and gas fell to a record low of 404 on May 20, according to data from Baker Hughes Inc.
All in all, the adjustment in the demand-supply balance anticipated by the IEA has weighed on oil prices.
The price of oil dropped 3 percent Tuesday after the International Energy Agency cut its forecast for global demand growth.
The organisation reversed its previous projection that stubborn global oversupply would be soaked up by demand in the latter part of 2016.
Weakening demand India and China coupled with slowing economic momentum in the United States has dampened demand growth, the IEA said.
An increase in exports by these two countries would be a major oil-market development ahead of talks in Algeria at the end of this month among OPEC members to cap output. It said that inventories touched a record high of more than 3.1 billion barrels last month (read: 3 Energy ETFs at 52-Week Highs on Huge Inventory Drop).
“The world’s largest producer, Saudi Arabia, is lukewarm about a freeze, while Iran and Iraq are still increasing output following wars and sanctions and they’re unlikely to support a deal until they’re pumping at full capacity”.
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The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russian Federation at informal talks in Algeria between September 26 and 28.
