Brent crude rose to a four-year high on Wednesday, as the market focused on upcoming US sanctions on Iran while shrugging off the year's largest weekly build in US crude stockpiles and reports of higher Saudi Arabian and Russian production.
"Nothing matters between here and Nov. 4," said Bob Yawger, director of futures at Mizuho in New York, referring to the date when US sanctions take full effect. "You just had the biggest build this year, and the market rallied right through it."
Brent crude rose $1.81 to $86.60 a barrel by 1:40 p.m. EDT (1740 GMT), touching a high of $86.74 a barrel, the most since Oct. 30, 2014. US crude was up $1.50 at $76.73 a barrel.
Both benchmarks dipped briefly after the US government released inventory figures, then resumed their climb.
"The speculative community took an opportunity to buy on the dip," Yawger said.
US crude inventories jumped 8 million barrels last week, quadruple analysts' expectations and the biggest build since March 2017, the Energy Information Administration said.
Earlier in the session, crude had been pushed lower as Saudi Energy Minister Khalid al-Falih said the kingdom had raised output to 10.7 million barrels per day in October and would pump more in November.
The record high for Saudi output is 10.72 million bpd in November 2016.
Russia and Saudi Arabia struck a private deal in September to raise oil output to cool rising prices and informed the United States before a meeting in Algiers with other producers, four sources familiar with the plan told Reuters.
Al-Falih, who was attending a Moscow energy conference with Russian President Vladimir Putin and other influential energy officials, said Saudi Arabia has successfully met additional demand.
"We see the market is being well supplied," he said.
The Organization of the Petroleum Exporting Countries and its allies have been limiting supply since 2017 to get rid of a glut. They partially relaxed the cut in June, under pressure from US President Donald Trump to cool prices.
But crude still found support from expectations that US sanctions on Iran will strain the ability of other major producers to meet global demand. One analyst said the Saudi plan to pump more would not change much.
"Saudi is still very timid, the market wants to see something more proactive," said Petromatrix analyst Olivier Jakob. "That's why the market is not reacting very much to the different headlines."
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