SINGAPORE: US crude prices briefly rose to a premium over internationally traded Brent on Wednesday following a report of a surprise dip in US inventories and the potential for more exports in an oil market which still suffers from ballooning oversupply.
Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $36.47 per barrel at 0744 GMT, up 33 cents from their last settlement.
Brent crude earlier traded as low as $36.28 a barrel, flipping WTI from a long-standing discount into a slight premium over the international benchmark for the first time since a short period in November 2014.
For the remaining Asian trading hours, Brent and WTI contracts were around parity. Brent was trading at $36.51 a barrel at 0744 GMT.
Except for November last year, WTI has traded at a discount to Brent since 2010. Spreads for contracts delivered further into 2016 have already seen a WTI premium over Brent for much of December.
Prior to 2010, WTI was usually at a premium to Brent as the U.S. shale oil boom had yet to kick off, meaning that the world's biggest oil consumer had higher crude and fuel imports.
Since then, U.S. petroleum imports have fallen from a peak of almost 14 million barrels per day (bpd) to around 9 million bpd, according to government data.
But as shale output dips and the government lifts a decades-old crude export ban, the U.S. market could tighten while supplies globally keep ballooning on the back of soaring output from Russia and the Organization of the Petroleum Exporting Countries (OPEC).
Although no immediate large-scale exports are expected, some American oil will likely flow from the United States into the global market next year.
Stronger WTI prices were also supported by an unexpected fall in U.S. crude stocks, as reported by industry group the American Petroleum Institute.
Crude inventories fell by 3.6 million barrels last week to 486.7 million, compared with analysts' expectations for a increase of 1.1 million barrels.
Official inventory data will be published later on Wednesday.
The general outlook for oil is for low prices to remain as production stays near record levels until operators are forced to shut down due to losses.
"We see risks to our OPEC production forecast of 32 million bpd next year as skewed to the upside," Goldman Sachs said adding that high production could lead to lacking storage capacity by next spring.
Crude prices may need to fall to $20 per barrel to force shutdowns and bring production back in line with demand, Goldman said.
Global production currently exceeds demand by between 0.5 million and 2 million barrels per day, based on analyst estimates.
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