Oil prices rose on Wednesday, hitting a 10-month high, as a surprise build in U.S. crude inventories did not dampen expectations of tight crude supply for the rest of the year.
International benchmark Brent futures rose 39 cents to $92.45 a barrel by 10:49 a.m. EDT (1449 GMT). Its session high of $92.84 a barrel was the highest since November.
U.S. West Texas Intermediate (WTI) crude gained 45 cents to $89.29. Its session high of $89.64 a barrel was also the highest since November.
Front-month Brent futures contracts traded as high as $4.90 a barrel above those for delivery six months further out , the widest spread since November, indicating tightening supply.
Prices gained despite government data that showed U.S. crude stocks, gasoline and distillate inventories rose last week.
U.S. crude inventories (USOILC=ECI) rose by 4 million barrels in the last week to 420.6 million barrels, confounding analysts’ expectations in a Reuters poll for a 1.9 million-barrel drop.
“The big picture is the extended voluntary production cuts by Saudi Arabia and Russia,” said Andrew Lipow, president of Lipow Oil Associates in Houston. Those two countries have extended production cuts of 1.3 million barrels per day (bpd) of crude to year end, which will lock in a substantial market deficit through the fourth quarter, the International Energy Agency (IEA) said on Wednesday.
The continuing supply cuts could lift Brent futures above the $100 a barrel threshold before the end of the year, Bank of America analysts said.