Crude prices turned lower Wednesday after the U.S. Energy Information Administration reported that gasoline supplies rose for the first time since February.
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Crude oil inventories fell by 1 million barrels, the second weekly decline in a row, according to EIA data. That's something market participants have been eagerly awaiting, since stubbornly high U.S. oil stockpiles have been an obstacle to efforts by the Organization of the Petroleum Exporting Countries to bring supply and demand back into balance.
But the 1.5 million barrel increase in gasoline stockpiles raised fears of a potential repeat of last year, when a glut of gasoline caused refiners to go on a diet, cutting their purchases of crude and sending oil prices lower.
U.S. crude futures fell 38 cents, or 0.73%, to $52.03 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, traded down 40 cents, or 0.73%, to $54.49 a barrel.
The increase in gasoline stockpiles was largely driven by a jump in imports, said Sam Margolin, an analyst at Cowen & Co. While fuel demand has been relatively strong, consumers weren't able to absorb the additional 355,000 barrels-a-day of imported fuel that came ashore last week, he said.
"People dump gasoline in the U.S. because it's one of the few places in the world where demand has been consistently good," he said. "We just have to watch that. A similar thing happened last year and obviously was not good for oil prices in the second half of the year," he said.
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The American Petroleum Institute, an industry group, reported Tuesday evening that gasoline supplies rose by 1.4 million barrels.
But the government data still took many market participants by surprise. Gasoline supplies had been on the decline for eight straight weeks prior to Wednesday's data, and summer driving season, when gasoline demand peaks, is quickly approaching. Analysts and traders surveyed by The Wall Street Journal had predicted that gasoline supplies would drop by 2 million barrels.
"As we approach the Memorial Day weekend, gasoline numbers are going to have more and more importance," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.
And refiners are running plants hard -- their utilization rose to 92.9% of capacity last week, up from 91% the previous week. That means they're soaking up more of the oil that has built up in storage tanks, but it could point to more and more gasoline going into storage, Mr. Yawger said.
"There's a possibility this is not a one-off," he said.
Gasoline futures fell 1.52 cents, or 0.89%, to $1.6958 a gallon. Diesel futures fell 0.69 cent, or 0.43%, to $1.6150 a gallon.
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(END) Dow Jones Newswires
April 19, 2017 12:16 ET (16:16 GMT)