By: OrePulse

Oil prices fell on October 1 as traders weighed signs that crude exports from the Middle East were approaching levels last seen before this year's regional disruptions, even as refined fuel supplies continued to lag behind the recovery in crude shipments.

Brent crude futures for December delivery slipped below $97 a barrel, giving back part of a nearly 2 percent gain from the prior session. West Texas Intermediate traded near $89 a barrel.

Goldman Sachs estimated that roughly 23 million barrels a day were exiting the Middle East through the Strait of Hormuz and other routes, a pace the bank said was directionally consistent with a return toward pre-disruption volumes. A separate BloombergNEF analysis found that regional crude stockpiles had dropped by more than 500 million barrels since February.

The shift also showed up in futures pricing. The spread between near-term and longer-dated West Texas Intermediate contracts narrowed to less than $2 a barrel in backwardation, down from $4.68 a barrel two weeks earlier, pointing to easing concern over near-term supply.

"Reports of increased flows through Hormuz look directionally correct, even if exact volumes are difficult to verify," said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. "Time spreads remain backwardated but well off their highs, suggesting those additional barrels are providing some relief to physical markets."

The price moves followed a third consecutive monthly gain for crude in September, a stretch that coincided with a stalemate in talks between the United States and Iran, the report said.

Refined fuel supplies told a different story. Domestic distillate inventories stood at their lowest point on record for this time of year, while gasoline stocks in the Midwest sat at a matching seasonal low, highlighting a gap between crude availability and finished-fuel supply that has kept downstream prices elevated even as crude slipped.