"A solid draw to crude inventories amid higher refinery runs - almost 800K [bbl/day] above year-ago levels - [was] offset by a whopper of a build to gasoline inventories", says Matt Smith, director of commodity research at ClipperData.
Domestic US oil output ran at 9.707m b/d, up by 25,000 b/d from the prior week. That line reopened on November 28, so this report captures a period where the line was still largely closed.
Meanwhile, the high level of stockpiles in the USA and increasing production from shale companies have threatened to undermine prices.
West Texas Intermediate for January delivery was at $57.27 a barrel on the New York Mercantile Exchange, down 35 cents, at 9:46 a.m. London time.
Analysts noted that the oil market looked vulnerable following a build up of bullish bets ahead of a meeting between the Organization of the Petroleum Exporting Countries and other major producers last week.
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Stephen Brennock, an analyst with London oil broker PVM, said in an emailed market report that geopolitical issues may be the next wildcard for the price of oil. But if prices top their hedged positions, that could push US producers into more drilling.
One factor that could undermine Opec and Russia's effort to cut supplies and prop up prices is USA oil production, which has risen by 15% since mid-2016 to 9.68-million barrels per day (bpd), close to levels of top producers Russian Federation and Saudi Arabia. Analysts had expected a draw of 3.507 million barrels.
In parallel, oil imports declined by 127,000 barrels a day from the week before to an average rate of 7.2m b/d. Refineries were running at 93.8% of capacity, with daily input averaging 17.2 million barrels a day, about 192,000 barrels a day more than the previous week's average.
USA crude imports fell last week by 73,000 bpd. Prices rose 15 cents to $57.62 on Tuesday. It marks the lowest close for the benchmark since November 16 and the biggest one-day decline for WTI since October 6.
The VanEck Vectors Oil Services ETF (NYSEARCA: OIH) traded down about 1.3%, at $24.66 in a 52-week range of $21.70 to $36.35.