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Oil Contracts Diverge as U.S. Supply Data Weigh on Prices

NEW YORK--U.S. oil prices fell Wednesday on data that crude supplies shrank less than expected last week, while Brent, the international benchmark, continued to rise on concerns about Iraqi oil supplies.

Light, sweet crude for July delivery settled down 39 cents, or 0.4%, at $105.97 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 81 cents, or 0.7%, to $114.26 a barrel, the highest settlement since Sept. 6, 2013.

The price gap between the two was at its widest since mid-May.

U.S. oil supplies declined 579,000 barrels last week, compared with an average Wall Street Journal survey estimate for stocks to fall 1.1 million barrels on the week.

Refiners didn't process as much oil into gasoline and other products as analysts had expected. Refining capacity utilization fell 0.8 percentage point to 87.1% of capacity, its lowest since late March, compared with expectations for the operating rate to rise by 0.8 percentage point.

The refinery utilization figure "was a surprise," said Andy Lipow, president of Lipow Oil Associates in Houston. "I think it's all due to a number of unscheduled outages."

Several refineries were still undergoing planned maintenance last week and others experienced unplanned outages. The return of those refineries "should result in an increase in runs showing up in the data next week," said Mike Tran of CIBC World Markets in a note.

Supplies in Cushing, Okla., a key storage hub and the delivery point for the Nymex contract, rose by 200,000 barrels to 21.4 million barrels.

Cushing stocks have fallen rapidly in recent months as a new pipeline shipped oil out of storage to refineries along the Gulf Coast. As inventories dropped from 41.8 million barrels in the week ended Jan. 24 to 21.2 million barrels in the week ended June 6, prices climbed amid concerns that supplies at the delivery point would reach such low levels that it would be difficult to pump oil out of storage tanks.

Though last week's rise at Cushing was small, it could indicate that supplies there have reached an "equilibrium," said Kyle Cooper, managing director of research at IAF Advisors in Houston.

Meanwhile, Brent prices rose to a fresh nine-month high on concerns that violence in Iraq could threaten the country's oil production.

Iraqi government forces and Sunni militants fought Wednesday for control of the country's main oil refinery. The facility serves the domestic market and doesn't affect the country's oil production or exports, which haven't been halted. Still, shutting down the main source of refined fuel for Baghdad and many Sunni and Kurdish areas of Iraq could deepen sectarian tensions in the country.

Front-month July reformulated gasoline blendstock, or RBOB, settled up 0.71 cent, or 0.2%, at $3.0982 a gallon, the highest settlement price since July 19, 2013.

July diesel rose 2.21 cents, or 0.7%, to $3.0401 a gallon, the highest settlement since March 4.

(Ali A. Nabhan, Ellen Knickmeyer and Sarah Kent contributed to this article.)