Oil held losses near $56 a barrel after falling the most in two months as U.S. gasoline stockpiles expanded more than expected, offsetting a third weekly decline in crude inventories.
Futures were little changed in New York after tumbling 2.9 percent Wednesday, the biggest daily drop since Oct. 6. Motor fuel stockpiles rose by 6.78 million barrels last week for a fourth weekly advance, according to Energy Information Administration data. The gain was more than double the most bearish estimate in a Bloomberg survey. Oil output increased to a record.
Oil has advanced about 18 percent since the start of September and is heading for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies extend supply cuts through the end of 2018. A sustained run above $60 a barrel is needed for a new surge in U.S. output, JPMorgan Chase & Co. said in a note after talks with shale operators in the Permian basin.
“The buildup in gasoline stockpiles and the impact that will have on refiner demand in the near term weighed on the market,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “The focus shifts back to supply, particularly from the U.S. now that the OPEC deal is squared away.”
West Texas Intermediate for January delivery was at $55.90 a barrel on the New York Mercantile Exchange, down cents, at 7:45 a.m. in London. Total volume traded was about 16 percent above the 100-day average. Prices slid $1.66 to $55.96 on Wednesday.
Brent for February settlement added 3 cents to $61.25 on the London-based ICE Futures Europe exchange after falling 2.6 percent on Wednesday. The global benchmark traded at a premium of $5.28 to February WTI.
U.S. crude inventories fell by 5.61 million barrels last week, the EIA reported Wednesday. Oil production expanded for a seventh week to 9.7 million barrels a day, the highest level in weekly data compiled by the EIA since 1983.
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