HOUSTON: Oil prices traded about $1 higher on Thursday, reversing course as low levels of diesel inventory ahead of winter helped investors shrug off higher-than-expected stocks of crude and gasoline.

Brent crude futures for December delivery rose $1.22 to $93.67 a barrel, a 1.3% gain, by 11:29 a.m EST (1529 GMT), after retreating earlier in the day. US crude rose $1.15, or 1.3%, to $88.42 per barrel.

“The most disturbing part of the (EIA) report is that distilling inventories are so far below average. Winter is coming,” said Phil Flynn, analyst at Price Futures Group in Chicago.

“The market is looking at the big picture, as opposed to the short term demand numbers that were impacted by the storm.” Distillate stockpiles, which include diesel and heating oil, fell by 4.9 million barrels in the week ended Oct. 7 to 106.1 million barrels, the lowest since May, the Energy Information Administration said, versus expectations for a 2 million-barrel drop.That helped investors look past a surprise 2 million build of gasoline stocks, and a larger-than-expected near 10 million barrel rise in crude inventories.

The report comes amid concerns that rising inflation will dent fuel demand and as the International Energy Agency warned that the global economy may go into recession. U.S consumer prices increased more than expected last month and underlying inflation pressures continued to build up, reinforcing expectations that the Federal Reserve will deliver a fourth 75-basis points interest rate hike next month.

The CPI rose 0.4% last month after gaining 0.1% in August, the Labor Department said on Thursday. Economists polled by Reuters had forecast the CPI climbing 0.2%.

Also weighing on prices, was a warning by the International Energy Agency (IEA) that last week’s OPEC+ decision to cut supply by 2 million barrels per day (bpd) may lead to a global recession.

“The OPEC+ plan has derailed the growth trajectory of oil supply through the remainder of this year and next, with the resulting higher price levels exacerbating market volatility and heightening energy security concerns,” the IEA said.The IEA downgraded its oil demand growth estimates slightly for this year to 1.9 million bpd and by 470,000 bpd in 2023 to 1.7 million bpd.

This comes after OPEC on Wednesday cut its outlook for demand growth this year by 460,000 bpd to 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation. It lowered its 2023 oil demand forecast by 360,000 bpd to 2.34 million bpd.