Oil prices fell to a three week low Wednesday as data showing an increase in U.S. oil production outweighed the largest weekly decline in oil stockpiles this year.
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U.S. crude futures declined for a third straight day, falling 77 cents, or 1.62%, to $46.78 a barrel on the New York Mercantile Exchange -- their lowest settlement since July 24. Brent crude, the global oil benchmark, fell 53 cents, or 1.04%, to $50.27 a barrel on ICE Futures Europe.
The amount of oil in U.S. storage tanks fell by more than 8.9 million barrels last week according to the latest figures from the U.S. Energy Information Administration -- on par with the 9.2 million barrel drop anticipated by The American Petroleum Institute, an industry group. The decline was nearly three times the 3 million barrel drop forecast by analysts and traders surveyed by The Wall Street Journal.
U.S. stockpiles have become a closely watched proxy as investors watch for signs that the global oil glut is shrinking.
"At the rapid attrition rate of the past two months, the U.S. oil surplus would be gone by mid-December," analysts at Standard Chartered said Wednesday.
But oil price gains were capped by signs that U.S. producers are continuing pump more. U.S. production rose to more than 9.5 million barrels a day -- approaching the 2015 peak of around 9.6 million barrels a day, according to the EIA data.
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"That has totally stymied any rally that would be generated by this 9 million barrel draw," said Bob Yawger, head of the futures division at Mizuho Securities USA.
While the EIA's weekly production figures have often been revised lower this year when monthly data has been released, the prospect of rising U.S. output has weighed on the market throughout the year. Investors have worried that U.S. producers would rush to fill the void left by cutbacks from members of the Organization of the Petroleum Exporting Countries and other major exporters that agreed to trim their output, keeping the market oversupplied.
"The trend continues to move higher week on week. The fact of the matter is we continue to see the growth in the shale barrels," said Andy Lipow, president of Lipow Oil Associates. "While inventories continue on their decline, the market remains concerned that the supply world-wide simply isn't cleaning up fast enough."
The EIA reported that gasoline inventories were rose slightly by 22,000 barrels last week -- short of the 1 million barrel decline analysts were anticipating, as demand for the fuel fell.
Gasoline futures fell 1.57 cents, or 0.99%, to $1.5638 a gallon. Diesel futures fell 2.52 cents, or 1.58%, to $1.5755 a gallon.
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(END) Dow Jones Newswires
August 16, 2017 15:51 ET (19:51 GMT)