Oil Prices Slide as Increase in Gasoline Stockpiles Offsets Crude Inventory Draw

Crude oil prices were falling on Thursday after a big increase in domestic fuel stockpiles offset a major decline in commercial crude inventories.

U.S. benchmark West Texas Intermediate crude for February delivery was down by 0.2%, trading at around $53.13, while Brent crude futures were also falling by nearly 0.2% to $56.37 around noon ET.

The U.S. Energy Information Administration (EIA) reported Wednesday that gasoline inventories increased by 8.3 million barrels last week, and are near the upper limit of the average range.

Meanwhile, crude inventories decreased by 7.1 million barrels for the week ending Dec. 30, 2016. However, at 479 million barrels, domestic inventories remain near the upper limit of the average range for this time of year, the EIA said.

Analysts had been anticipating a 2 million barrel-a-day draw in inventories, with a 1 million barrel-a-day increase in gasoline stockpiles. But, the EIA report is relatively in-line with the American Petroleum Institute (API), which reported a draw of 7.4 million barrels over the previous week. 

Crude oil imports decreased to 7.2 million barrels per day last week, down by 984,000 barrels a day from the previous week. Over the past four weeks, imports average 7.8 million barrels per day, which represents a 0.5% increase from the same period last year.

U.S. refineries continue to hike output even as inventories decrease. Refinery crude rose by 132,000 barrels per day to 16.7 million barrels per day. Refineries operated at 92% of their operable capacity last week, according to the EIA.

Immediately following the EIA report, oil majors such as ExxonMobil (XOM) and ConocoPhillips (COP) were both falling during the trading session.

Oil prices had been rising prior to the EIA report on news that OPEC's leading producer, Saudi Arabia, began discussions with customers about a reduction in crude sales in order to support the cartel's plan to reduce global supply, according to Reuters. As part of OPEC's deal to curb production output, Saudi Arabia imposed a cut of 486,000 barrels a day, the largest among the cartel. 

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