Updated from 10:57 a.m. EDT

Oil prices failed to hold early gains Wednesday, turning south despite an Energy Department report showing an unexpected swoon in U.S. crude stocks for last week.

After rising more than 70 cents earlier, the July contract was recently down 66 cents to $53.10 a barrel, continuing a downtrend that has lasted for three sessions.

The decline bucked inventory data that looked bullish on the surface. According to the Energy Department, U.S. crude stocks fell by 3.1 million barrels last week, compared with economists' expectations for a 300,000-barrel increase. Gasoline inventories fell by 31,000 barrels, compared with expectations for a 1.1 million-barrel build.

Distillate stocks, which have garnered a lot of attention recently, rose in the week, reflecting builds in diesel fuel inventories. The heating oil component of the distillate category showed no change.

Shares of big oil producers caught a bid after the news hit, then leveled off.

Exxon Mobil

(XOM) - Get Report

was recently down 0.4%,


(COP) - Get Report

rose 0.4%, and


(CVX) - Get Report

fell 3%.

The July contract is now about $5 below oil's all-time high of just above $58 touched in early April.