Oil held gains above $88 a barrel before the release of weekly US stockpiles data as traders took cues from wider markets and a fading geopolitical premium. 

Brent was marginally lower on the day after climbing 1.6% on Tuesday, while West Texas Intermediate hovered around $83. The dollar erased an earlier loss, making commodities priced in the currency less appealing.

The American Petroleum Institute reported nationwide crude inventories fell by 3.2 million barrels last week, according to people familiar with the data. If confirmed by US Department of Energy figures later Wednesday, that would be the first drop in five weeks.

The US Senate, meanwhile, passed tougher measures against Iran in response to its attack on Israel earlier this month, with President Joe Biden saying he’ll sign the legislation into law. While some Asian refiners are bracing for added scrutiny, the move isn’t expected to have a significant market impact.

Oil prices have pulled back from their recent highs above $90 a barrel as some of the geopolitical risk in the Middle East began to ease. Traders are also weighing the outlook for US monetary policy, with data on the Federal Reserve’s preferred inflation gauge due later this week.

“We are back focusing on fundamentals and, in fact, the lower risk premium,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management. “The DOE inventory data will be key today.”

Timespreads are signaling tighter conditions, with the gap between Brent’s two nearest contracts widening to $1.05 a barrel in backwardation, a bullish pattern in which the nearer contract trades at a premium to the next in sequence. That compares with 69 cents a week ago.