Crude futures extended declines midweek after a big rise in weekly US inventories that fanned worries about an oversupplied market.

The softness was aided by weak economic readings in the US and signs of easing tensions between Saudi Arabia and Iran.

Wall Street fell more than 1% for the second straight session, with stocks hitting a fresh one-month low, as September’s weak private payrolls report added to concerns of a slowdown in the world’s largest economy.

Oil has been on a downward trend in recent days amid negative global economic data and a fast recovery in Saudi oil production following the 14 September attacks that initially halved the kingdom’s production.

International benchmark Brent futures were fetching around $57.45 per barrel in London in the middle of this week, compared with $62.08 at the same time last week.

Meanwhile, US West Texas Intermediate crude was changing hands at around $52.40 per barrel in New York trading, down from last week’s $56.35.

The market attempted a recovery earlier on Wednesday, but data from the Energy Information Administration (EIA) then soured the mood.

The EIA revealed an inventory build of 3.1 million barrels for the week to 27 September, exceeding analysts' expectations of 1.6 million barrels. It also reported a 200,000-barrel decline in gasoline inventories while distillate fuels fell by 2.4 million barrels.

Signs of easing geopolitical tensions in the Middle East also weighed on the market.

Iran’s Oil Minister Bijan Zanganeh sought to defuse tensions with Saudi Arabia, calling his counterpart in Riyadh “a friend” and saying Tehran was committed to stability in the region.

Both oil ministers from Iran and Saudi Arabia, which have repeatedly clashed at Opec meetings over output policies, were attending a top Russian energy conference chaired by President Vladimir Putin.

Putin said Russia would continue to be a responsible player in the alliance between Opec and other producers, known as Opec+, which has implemented a deal this year to curtail output by 1.2 million barrels per day until March 2020.

“I think you’re continuing to get signs that demand growth is the primary drag on the market,” Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut, was quoted by CNBC as saying.

Meanwhile, Saudi Crown Prince Mohammed bin Salman said global energy supplies could be disrupted by the country's dispute with Iran, with oil prices jumping "to unimaginably high numbers."

Nonetheless Saudi Arabia has been sending more conciliatory messages to Iran, which is under severe US sanctions. Any real improvement between Opec’s two leading members would further undermine confidence in an oversupplied market.

Weekly

Downward trend sets in as oversupply fears grow