Crude oil futures fell nearly 1 percent on Wednesday after U.S. government data showed a sharp build in crude inventories, but a third weekly draw down in gasoline stocks kept losses at bay, ONA reports citing Reuters.
Brent crude futures fell 15 cents, or 0.2 percent, to $65.71 a barrel by 11:31 a.m. EST (1631 GMT). U.S. crude oil futures was 53 cents, or 0.9 percent, lower at $56.03 a barrel.
U.S. crude inventories rose 7.1 million barrels last week, far exceeding analysts’ expectations for an increase of 1.2 million barrels, the Energy Information Administration said.
“The report is bearish, and it stands in contrast to last week’s data as it relates to crude oil,” said John Kilduff, a partner at Again Capital LLC in New York, referring to the previous week’s drawdown of nearly 9 million barrels.
However, “gasoline demand is picking back up, which is a supportive feature of the report.”
U.S. gasoline stocks fell 4.2 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop, leading U.S. gasoline futures nearly 0.5 percent higher.
The markets have been weighed by surging U.S. crude production, which last week held at an all-time high of 12.1 million barrels per day, according to the EIA.
Chevron Corp and Exxon Mobil Corp released rival Permian Basin projections on Tuesday pointing to increased shale oil production in the largest U.S. oil patch.
The increases would cement the pair as the dominant players in the West Texas and New Mexico field, with one-third of Permian production potentially under their control within five years.
The rise in North American production undermines supply cuts led by the Organization of the Petroleum Exporting Countries and its non-member allies, including Russia, that has helped crude prices rise about 20 percent this year.
“An increase in U.S. crude inventories is weighing on oil prices and in the long term, concerns over rising oil production in the Permian region are keeping a lid on prices,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
OPEC and its partners have pledged to curb output by 1.2 million bpd, and they are likely to push back their decision whether to extend the production agreement to June from April, sources said.
Russia said it would also speed up its plan to cut crude output in March.
Meanwhile, the market is looking for further signs that the United States and China are making progress in talks to resolve their trade conflict.
U.S. Secretary of State Mike Pompeo said President Donald Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.