Prices for U.S. West Texas Intermediate crude oil to be delivered next July traded on Wednesday about 90 cents higher than crude oil to be delivered in January, the highest premium this year. Barrels for delivery in a year from now traded at a 20-cent premium to one-month forward prices.
Investors now feel the market is a bit over supplied, said Andrew Lipow, president of Lipow Oil Associates in Houston, citing strong U.S. production and weak refinery runs.
U.S. crude oil production averaged 13.1 million barrels per day last week, holding near record-high levels, offsetting the impact of a 2.2-million-barrels-per-day output cut from the Organization of the Petroleum Exporting Countries and its allies.
Maintenance at U.S. refineries and concerns about the economic health at top consumers the United States and China have also pressured demand.
U.S. refinery utilization stood at 90.5% of total capacity last week, edging up as maintenance starts to ease.
However, the premium of future prices was not steep enough to incentivize crude piling as higher interest rates have increased the cost of storing oil, Lipow said.
The U.S. would instead continue to export excess supply, he added.
(Reporting by Arathy Somasekhar and Georgina McCartney in Houston; Editing by Leslie Adler)