Brent crude futures were at $ 78.17 per barrel at 0210 GMT, down 26 cents, or 0.3 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $ 71.02 a barrel, down 29 cents, or 0.4 per cent, from their last settlement.
Despite the dips, both financial oil benchmarks remained close to their November 2014 highs of $ 79.47 and $ 71.92 a barrel respectively, reached the previous day.
But there are signs in physical crude markets that may give pause to financial investors.
There are also signs that oil production will rise, especially at majors like ExxonMobil, Royal Dutch Shell , Chevron, BP and Total.
“Aggregate production – both actual and projected – is growing for the majors,” S&P Global Ratings said in a report published on Tuesday.
Spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers are struggling to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in west Texas and Canada.
The bottleneck in North America likely contributed to a 4.9 million barrel rise in US crude oil inventories, to 435.6 million barrels, that the American Petroleum Institute reported on Tuesday.
“The API inventory data in the US fits with … a topping pattern – or at least a decent pause – for oil prices at the moment,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Despite Wednesday’s dips and some indicators implying the financial oil has overshot physical oil, overall crude market conditions have tightened since 2017 when the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, started to withhold supplies to push up oil prices.
With renewed US sanctions looming against OPEC-member Iran and oil demand strong, analysts said crude markets will likely remain relatively tight for much of the year.
Stronger oil prices are also spilling into other markets.
“A rising oil price brings upside price risk to all commodities,” Morgan Stanley said in a note to clients this week.
The US bank said rising diesel prices contributed 10-20 per cent to cash costs in the metals and dry-bulk sectors, while the price of oil also significantly contributed to power generation.
“Finally, transport costs (5-20 per cent of cash costs) will also rise in response, with the heaviest impact on bulk commodity producers,” Morgan Stanley said.