Investing.com - Crude oil futures traded down during U.S. afternoon hours Wednesday, after a U.S. government report showed oil supplies rose more-than-expected last week.
Oil prices remained supported as appetite for riskier assets improved following the release of stronger-than-expected U.S. housing data and after Moody's affirmed Spain's sovereign rating at investment grade.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD92.39 a barrel during U.S. afternoon trade, easing down 0.15%.
The December contract rose by as much as 0.8% earlier in the day to hit a session high of USD93.26 a barrel.
Prices traded at USD92.99 a barrel prior to the release of the EIA data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories increased by 2.9 million barrels in the week ended October 12, compared to expectations for a 1.7 million barrel increase.
Total U.S. crude oil inventories stood at 369.2 million barrels as of last week.
Total motor gasoline inventories increased by 1.7 million barrels, compared to expectations for a gain of 0.48 million barrels.
New York-traded crude prices were higher earlier in the session after the Commerce Department said U.S. housing starts rose by 15% last month to a seasonally adjusted annual rate of 872,000 units, the fastest rate since July 2008 and easily outstripping expectations for a 2.7% increase.
Housing starts for August were revised up to 758,000 million units from a previously reported 750,000 million units.
Building permits grew by 11.6% to a 894,000-unit pace in September, while August's permits were unrevised at 801,000 units.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Oil prices were also underpinned after rating agency Moody's affirmed its Baa3 investment grade sovereign rating on Spain late Tuesday, easing fears of an imminent downgrade to junk status.
In a report, Moody’s expressed confidence that reforms enacted by the Spanish government and support from the euro zone would ensure that Madrid had continued access to the credit market.
The yield on Spanish 10-year bonds fell to 5.49% following the announcement, the lowest level since April.
Speculation that the debt-strapped nation was moving closer to requesting a bailout further supported sentiment, after Spanish government officials said earlier in the week they were exploring the option of requesting a credit line from the European Stability Mechanism, in order to satisfy the terms of the European Central Bank’s bond buying program.
A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.
European Union policymakers will hold a two-day summit in Brussels starting on Thursday to discuss ways to firewall and extinguish the debt crisis as well as Greece's steps towards fiscal recovery.
Market players also looked ahead to Chinese third quarter growth figures due out on Thursday to gauge whether the world second largest economy is heading towards a hard or a soft landing.
Market analysts expect the data to show China's annual growth slowed for a seventh straight quarter in the July-September period to the weakest level since the depths of the 2009 global financial crisis.
The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Concerns over declining global oil demand have intensified in recent sessions after the International Energy Agency last week cut its demand growth forecast for next year, citing lower consumption in Europe, the Americas and China.
Market players also continued to focus on escalating tensions between Syria and Turkey and the possibility that Iran could support Syria in such a dispute.
Tensions between Turkey and Syria have been growing since Syrian shells last week killed five people in a Turkish border village.
Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 52% of proved reserves in 2011.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.65% to trade at USD113.28 a barrel, with the spread between the Brent and crude contracts standing at USD20.89 a barrel.
London-traded Brent prices have been well-supported in recent sessions, as a combination of lingering concerns over a disruption to supplies from the Middle East and worries over declining production in the North Sea-region have been boosting prices.