NEW YORK ( TheStreet) -- Crude futures settled lower Wednesday after inventories swelled far more than expected last week, although an unexpected drawdown in fuel stocks helped limit price weakness.

The Energy Information Administration said crude stockpiles increased by 2.3 million barrels for the week ended Jan. 29, defying analysts' expectations for a 1 million barrel drawdown.

Investors received a hint of the supply buildup on Tuesday when the American Petroleum Institute said oil stocks rose by 4.7 million barrels in its own measure.

Platts senior oil analyst Linda Rafield said a rebound of 559,000 barrels per day in U.S. crude oil imports combined with a surprise decline in refinery run rates caused crude stockpiles to rise.

"Refinery throughputs, as an ongoing sign of the current weak margin environment, fell 133,000 barrels per day to 13.7 million b/d, with nearly all the drop-off occurring along the Gulf Coast despite several restarts," Rafield said, adding that the real surprise was the 1.3 million-barrel decline to gasoline inventories, which are still 5.1 million barrels above the five-year average level.

Analysts had forecast gasoline inventories to rise by 1.5 million barrels. The government report said that refiners cut back on operations yet again, as the capacity utilization rate fell to 77.8% after totaling 78.5% in the prior week.

The March crude oil contract lost 25 cents, or 0.3%, to settle at $76.98 a barrel, while March reformulated gasoline gained nearly 2 cents, or 0.9%, to close the session at roughly $2.04 a gallon.

The March heating oil contract settled a penny lower, or off by 0.6%, at $2.02 a gallon after the report showed distillate inventories fell by 1 million barrels. Distillates fuels were forecast to fall by 1.2 million barrels.

"This week's decline in middle distillates inventories was concentrated in diesel stocks. Inventories of heating oil rose 800,000 barrels," Rafield said.

Crude prices had moved higher in the morning after reports suggested easing of job losses in the private sector and that the services sector grew at an albeit tepid pace.

Major oil-related equities were trading broadly lower, as the NYSE Arca Oil Index fell 1.1%. Exxon Mobil ( XOM - Get Report) lost 36 cents, or 0.5%, to $66.60 during the day's session while Chevron ( CVX - Get Report) and ConocoPhillips ( COP - Get Report) finished down by 1.2% and 0.3%, respectively.

Services players were trading broadly down as well, as the Philadelphia Oil Service Sector Index lost 0.1%. Still, the index was helped by a 3.1% surge in National Oilwell Varco ( NOV - Get Report), which reported an earnings beat despite slumping demand for drilling equipment. The stock added $1.32, to close at $43.97.

Oil and gas drilling contractor Diamond Offshore Drilling ( DO - Get Report) reports fourth-quarter earnings on Thursday. Analysts are looking for a profit of $2.32 a share.

Sunoco ( SUN - Get Report) and National Fuel Gas ( NFG - Get Report) will report after Thursday's closing bell. Wall Street is expecting a loss of 26 cents a share from Sunoco and earnings of 73 cents from National Fuel Gas.

The market will get a read on natural gas storage levels on Thursday when the Energy Information Administration releases its weekly report at 10:30 a.m. EST. Analysts polled by Platts are anticipating a withdrawal of 121-125 billion cubic feet for the week ended Jan. 29.

The March natural gas contract settled the session down by 4 cents, or 0.6%, at $5.42 per million British thermal units and the U.S. Natural Gas Fund ( UNG) shed 5 cents, or 0.5%, to close at $9.82.

--Written by Sung Moss and Melinda Peer in New York.