NEW YORK (Reuters) - Oil eased on Wednesday after a report showing U.S. crude inventories grew unexpectedly last week, while gasoline stocks surged and production hit another record.
Losses were limited by optimism that a U.S.-China trade deal would be reached soon.
WTI trade volumes lower ahead of the U.S. Thanksgiving holiday, with lots of front-month contracts trading down about 5% compared with the previous session.
U.S. crude stocks swelled by 1.6 million barrels last week as production hit a record high at 12.9 million barrels per day and refinery runs slowed, the Energy Information Administration said. Analysts in a Reuters poll had forecast a drop of 418,000 barrels.
The more bearish news from the EIA was that U.S. gasoline inventories soared 5.1 million barrels, compared with expectations for a 1.2 million-barrel gain.
U.S. gasoline futures RBc1 dropped 3.63 cents, or 2.1%, to $1.67 a gallon.
“EIA’s estimate of a further increase in crude production to a record pace of 12.9 (million bpd) appeared to provide a significant catalyst behind today’s selling,” Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates, said in a note. “The RBOB (gasoline) futures provided a drag on the rest of the complex as a result of a much larger-than-expected gasoline stock build.”
Oil prices pared losses slightly after a report showing U.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row. [RIG/U] The rig count is an indication of future supply.
Drillers cut three oil rigs in the week to Nov. 27, bringing the total count down to 668, the lowest since April 2017, energy services firm Baker Hughes Co BRK.N said in data released early due to the U.S. Thanksgiving holiday on Thursday.
Hopes that Beijing and Washington would strike a trade deal limited losses in oil.
Prices had risen for the last two days on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, signaling an end to their 16-month trade dispute.
“Trade deal optimism persists,” said Tamas Varga of oil broker PVM. “The belief in a positive trade deal continues unabated.”
That was fueled by comments from U.S. President Donald Trump on Tuesday, who said the United States and China were close to agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues.
Additional reporting by Alex Lawler in London and Koustav Samanta; Editing by Marguerita Choy and Lisa Shumaker
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