Oil prices fell in volatile trade on Wednesday due to ongoing concerns about the economy and a weak kick off to the earnings season that weighed on stock markets.
After trading higher for most of the U.S. session, Brent turned negative as U.S. stocks fell after Alcoa posted a quarterly net loss and Chevron warned profits would fall sharply. U.S. crude traded lower throughout the day, ending down more than 1 percent.
Oil markets, which have been balancing concerns of lower global fuel demand against the risk of supply disruptions in the Middle East and loading delays in crude from the North Sea, were also closely watching forecasts from the U.S. government and the Organization of the Petroleum Exporting Countries.
Reports released on Wednesday from OPEC and the U.S. Energy Information Administration lowered global oil demand growth forecasts amid ongoing worries about economic growth.
Crude found early support from news of shelling along the Turkey-Syria border, hostility between Iran and the West and an impending Israeli election reinforced fears about potential threats to oil supplies from the Middle East Gulf.
"Although (U.S. crude) managed to further yesterday's Middle East driven price spike early in the session, it subsequently succumbed to a triple digit slide in the DJII that sent off further caution flags regarding global economic recovery" Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
Brent November crude traded down 17 cents to settle at $114.33 a barrel after trading as high as $115.59, the highest since prices hit $117.02 on Sept. 1, according to Reuters data.
U.S. November crude settled $1.14 lower at $91.25 a barrel. U.S. crude earlier tested resistance above the $93.33 peak from Oct. 1, after prices had stalled in consecutive sessions at intraday highs of $93.18 and $93.20 on Sept. 24 and 25.
U.S. gasoline and heating oil futures, which have been supported by low inventory levels and refinery disruptions this week, showed small gains despite the losses in crude.
Traders will be closely watching weekly U.S. inventory data from the American Petroleum Institute and the U.S. Energy Information Administration, due out late Wednesday and Thursday morning, respectively, for further signals about product stockpiles.
Analysts polled by Reuters forecast a 500,000 barrel draw in distillate stockpiles in the week to Oct. 5, an 800,000 barrel build in crude inventories, and no change in gasoline levels.
Brent's premium to U.S. crude pushed higher to near $23 a barrel in late activity after hitting $23.17, the widest level since Oct. 2011.
"Some temporary factors are keeping it wide, including a lower than expected return of North Sea production and the ongoing geopolitical premiums on the Brent side," said Vikas Dwivedi Global Oil & Gas Economist for Macquarie Group in Houston, referring to the delays in Forties cargo loading in the North Sea.
MIDDLE EAST, DEMAND WORRIES
Markets were closely watching developments between Turkey and Syria for signs of any action which could threaten oil supplies. Turkey's military chief of staff said on Wednesday his troops would respond with greater force if bombardments from Syria kept hitting Turkish territory.
"It's not that Syria and Turkey are significant oil exporters but Iraqi crude from the northern part of Iraq (Kirkuk) flows via pipeline through Turkey to Ceyhan," said Dominick Chirichella, an energy analyst at New York's Energy Management Institute.
Gloomy economic expectations have tempered oil prices this year against geopolitical turmoil, including the risk to supplies from Iran due to sanctions from the West.
Oil prices came under early pressure from continuing worries about economic growth after the International Monetary Fund said risks to global financial stability had risen in the past six months, leaving confidence "very fragile".
No. 2 oil consumer China's annual economic growth is expected to have slowed for a seventh straight quarter in the July-September period to its weakest level since the depths of the global financial crisis, a Reuters poll showed.
(Additional reporting by Matthew Robinson in New York, Alice Baghdjian in London, and Florance Tan in Singapore; Editing by Dale Hudson and Sofina Mirza-Reid)