Oil sinks more than 3.5% on shock US gasoline stocks build

Oil prices sank more than 3 per cent to their lowest in more than five weeks on Wednesday following US data showing an unexpectedly large weekly build in US gasoline inventories and International Energy Agency (IEA)data projecting a big increase in non-OPEC output in 2018.

The increase in US gasoline inventories drove down RBOB futures by more than 4 per cent, tugging Brent and US crude futures lower with them, analysts said.

"The industry continues to turn a crude oil surplus into a gasoline and distillate product surplus," Andrew Lipow, president of Lipow Oil Associates in Houston said.

After rising for three consecutive days, Brent futures were down $1.81, or 3.7 per cent, at $46.91 by 12:44 pm. US West Texas Intermediate crude was down $1.75, or 3.8 per cent, at $44.71 per barrel. Both contracts hit their lowest since May 5, driving them into technically oversold territory.

The US Energy Information Administration (EIA) said gasoline inventories increased by 2.1 million barrels during the week ended June 9, while crude inventories decreased by 1.7 million barrels.

That compares with analysts estimates in a Reuters poll for a 0.5 million barrel draw in gasoline stocks and a 2.7 million barrel draw in crude inventories.