Oil slides as gasoline inventories build

Earlier on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stocks fell 1 million barrels on the week, a bit less than anticipated. That's something market participants have been eagerly awaiting, since stubbornly high USA oil stockpiles have been an obstacle to efforts by the Organization of the Petroleum Exporting Countries to bring supply and demand back into balance.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were also nearly unchanged at $52.43 a barrel.

USA crude stocks fell last week as refineries hiked output, but gasoline supplies, which are already seasonally high, surprisingly increased, the Energy Information Administration said on Wednesday.

OPEC has had a hard time reducing a global crude glut, as supply remains high in parts of the world, particularly the United States, where inventories were at 532.3 million barrels, only about 3 million less than the record reached in March. Crude production and refinery operations rose in the week ended April 14.

USA oil prices fell almost 4 percent Wednesday, reaching a session low of $50.28 per barrel and marking their biggest daily percentage decline since early March, as inventories posted a less-than-expected decline for the week.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has had a hard time reducing a global crude glut, as supply remains high in parts of the world, particularly the U.S. WTI settled below the 50-day and 100-day moving averages for the first time in two weeks.

Brent crude futures were at $53.31 per barrel at 0108 GMT, up 38 cents, or 0.72 percent, from their last close.

The report also stated that oil production in February increased to ten million bpd from 9.75 million bpd in January as more oil was processed by domestic refiners.

Data from the American Petroleum Institute (API) on Tuesday showed that US markets remained bloated.

"We should see an accelerating level of crude draws, something we've been waiting for a while", Cavan Yie, senior equity analyst at Manulife Asset Management Ltd.in Toronto, said by phone.

Gasoline futures lead the losses the energy futures, with May gasoline RBK7, -3.12% down 1.2 cents, or 0.7%, at $1.699 a gallon.

The continued growth in US production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook.

The Organization of Petroleum Exporting Countries will decide at its meeting on May 25 whether to prolong the cuts, Secretary General Mohammad Barkindo said.

  • Zachary Reyes