Oil prices slipped on Wednesday after three days of gains as markets awaited key U.S. inventory data expected to show a build in U.S. crude stockpiles.
Brent crude LCOc1 was down 25 cents at $81.16 a barrel by 1205 GMT, after gaining $1.15 over the previous three sessions. The benchmark, which hit a two-week low last week as equity markets dropped, is trading around $5 below a four-year high of $86.74 reached on Oct. 3.
U.S. light crude oil CLc1 was 35 cents lower at $71.57.
Official oil inventory data from the U.S. Energy Department’s Energy Information Administration was due to be published at 1430 GMT on Wednesday.
A Reuters survey of eight analysts estimated crude stocks rose by about 2.2 million barrels last week.
On Tuesday, the American Petroleum Institute reported that U.S. crude inventories fell by 2.1 million barrels in the week to Oct. 12 to 408.5 million, surprising the market. [API/S]
“Oil prices are retreating from the early morning strength as bulls are taking profit ahead of the EIA stats,” said Tamas Varga, an analyst at London brokerage PVM Oil.
“It is quite probable that higher numbers will be the order of the afternoon should U.S. commercial oil inventories fall.”
Also underpinning sentiment was the scandal over the disappearance of prominent Saudi critic and journalist Jamal Khashoggi, who disappeared two weeks ago after entering the Saudi consulate in Istanbul.
U.S. President Donald Trump gave Saudi Arabia the benefit of the doubt in the case even as U.S. lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.
Saudi Arabia has said it will conduct an investigation into the disappearance, U.S. Secretary of State Mike Pompeo said before departing the kingdom for Turkey.
Investors are concerned that Saudi Arabia could use oil supply to retaliate against its critics.
Jim Ritterbusch, president of Ritterbusch and Associates, said Saudi Arabia could cut as much as 500,000 barrels per day of crude production “as a warning shot should the U.S. opt to impose any type of sanction in response to the Khashoggi developments”.
A claim by the United States that it aims to reduce Iran’s oil exports to zero is a “political bluff”, the head of the state-run National Iranian Oil Company was quoted as saying on Wednesday.
New U.S. sanctions on Iranian oil exports start on Nov. 4, while Iran has accused Saudi Arabia and Russia of breaking an OPEC-led agreement on output cuts by producing more crude.