U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Thursday, pressured by a report from the International Energy Agency that said global oil supply hit a record high in August despite lower production from Iran and Venezuela.
US light crude settled down $1.78, or 2.5 per cent, at $68.59 a barrel.
USA crude futures were up 35 cents at $69.60 a barrel. Brent has climbed for four straight sessions, gaining 2.2 percent the previous day.
Supply concerns were stoked by data showing that US crude production C-OUT-T-EIA fell by 100,000 barrels per day to 10.9 million bpd last week as the industry faced pipeline capacity constraints.
"A solid draw to crude inventories this week was the result of a counter-seasonal increase in refining activity - at a point when we should be tumbling into fall maintenance", said Matt Smith, director of commodities research at ClipperData.
Supplies at the key storage hub in Cushing, Oklahoma, rose by an estimated 900,000 barrels last week, according to a Bloomberg forecast.
Since spring when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply. "The situation should be closely watched, the right decisions should be taken".
"Going forward, economic uncertainty, and hence questions surrounding global oil demand, coupled with geopolitical tensions, will need to be factored into maintaining a balanced market in the months to come", the report said.
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Oil product stocks did rise, with distillate holdings, which include diesel and heating oil, climbing by 6.2 million barrels, while those for gasoline rose 1.3 million, according to the EIA data.
The increase comes despite an ongoing deal between OPEC and non-OPEC producers, notably Russian Federation, to curb oil production (and limit it to 32 Mmbpd) in order to support prices.
The previous sanctions cut 1.22 million bpd of Iranian crude oil exports which averaged 1.1 million bpd between 2012 and 2015, the Oxford Institute for Energy Studies data shows.
But it said rising demand could also be checked.
"Russia has potential to raise production by 300,000 barrels (per day) mid-term, in addition to the level of October 2016", he said.
OPEC said the world will need 32.05 million bpd from its 15 members in 2019, unchanged from last month.
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