WTI drops to $56 as industry data show U.S. gasoline stockpiles grew

Oil declined after industry data showed U.S. gasoline stockpiles expanded for the first time in four weeks.

Futures dropped 1.2 percent in New York after rising 0.3 percent on Tuesday. Motor-fuel inventories climbed by 9.2 million barrels last week, the American Petroleum Institute was said to report. That would be the biggest gain since January 2016 if replicated in government data due later on Wednesday. Nationwide crude stockpiles declined, according to the API data.

“This bears all the hallmarks of a year-end lull in U.S. fuel demand, which in turn should help safeguard the current bout of range-bound trading,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

Oil is averaging about $54 a barrel this quarter, the highest in more than two years, after the Organization of Petroleum Exporting Countries and its allies agreed to extend output cuts to the end of 2018. The new deal brought in Libya and Nigeria, assigning them a combined cap. Libya will maintain current output to stay in line with the agreement, a person familiar with the matter said.

West Texas Intermediate for January delivery was at $56.88 a barrel on the New York Mercantile Exchange, down 74 cents, at 1:31 p.m. London time. Total volume traded was about 8 percent below the 100-day average. Prices rose 15 cents to $57.62 on Tuesday.

Brent for February settlement lost 66 cents to $62.20 a barrel on the London-based ICE Futures Europe exchange, after adding 41 cents on Tuesday. The global benchmark traded at a premium of $5.30 to February WTI.

U.S. crude inventories dropped by 5.48 million barrels last week, the API said Tuesday, according to people familiar with the data. A Bloomberg survey predicted government data will show a decline of 2.5 million barrels.

© 2017 Bloomberg L.P