By Julia Simon
NEW YORK (Reuters) - Oil slid more than 1 percent on Wednesday, after U.S. data showed a counter-seasonal build in gasoline inventories and a smaller-than-expected decline in overall crude stocks coupled with another rise in domestic crude production.
Brent crude futures fell 85 cents, or 1.6 percent, to $54.04 a barrel as of 12:31 p.m. EDT (1631 GMT), while U.S. crude futures lost 77 cents, or 1.4 percent, to $51.64 a barrel. If the losses hold, it will mark three straight days of declines for crude.
U.S. crude stocks fell 1 million barrels in the latest week, according to the U.S. Energy Information Administration, a bit less than anticipated. Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity. That surprise build in gasoline, along with an increase in U.S. production, pressured prices. [EIA/D]
"Inventories remain stubbornly high," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. He added that as the United States is approaching the summer driving season, "the build in gasoline points to the fact demand isn't as strong as we expected."
A global crude glut has persisted even as the Organization of the Petroleum Exporting Countries and other producing countries including Russia have worked to reduce output under an agreement to cut supplies almost 1.8 million barrels per day in the first half of 2017.
But U.S. stockpiles and production have cast doubt on whether the OPEC cuts were enough. U.S. crude inventories were at 532.3 million barrels, only about 3 million barrels less than the record reached in March. Also, U.S. production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.
"Rising U.S. production levels are offsetting more than a third of the six-month agreement of the 1.8 million barrel-per-day cut," McGillian said. "It's the warning bell to the strength of the market."
The market received a modicum of support from comments by Mohammed Barkindo, secretary-general of OPEC, that the group was still committed to cutting inventories.
Other geopolitical concerns have supported oil prices. This week, U.S. President Donald Trump ordered a review of whether the lifting of sanctions against Iran was in the United States' national interests. The United States and allies lifted certain sanctions against Iran in late 2015 allowed Tehran to more than double its crude exports over 2016.
(Additional reporting by Henning Gloystein in Singapore and Libby George, Amanda Cooper and Alex Lawler in London; Editing by Dale Hudson and David Gregorio)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)