Oil futures fell Wednesday even though Energy Information Administration data showed across-the-board inventory draws, as doubts over an OPEC-led production agreement pressured prices.
NYMEX December crude settled down 78 cents at $49.18/b. ICE December Brent settled 81 cents lower at $49.98/b.
NYMEX November ULSD settled 1.2 cents lower at $1.5511/gal. NYMEX November RBOB settled down 1.74 cents at $1.4831/gal.
Oil futures initially jumped after EIA data was released. Crude stocks fell 553,000 barrels last week to 468.158 million barrels, which seemed to catch the market off-guard.
Analysts S&P Global Platts surveyed Monday were looking for a build of 400,000 barrels. The size of the expected build ratcheted even higher after the American Petroleum Institute reported late Tuesday a build of 4.8 million barrels.
NYMEX December crude hit an intraday high of $50.10/b, but the relief rally was short-lived and the oil complex drifted lower.
"Fundamentally the report was pretty solid," ION Energy consultant Kyle Cooper said. "The one thing is that crude production edged back over 8.5 million barrels per day."
US crude production increased 40,000 b/d last week to 8.504 million b/d, according to EIA estimates. Output fell to 8.428 million b/d the week ended July 1, ranging since then between 8.445 million b/d and 8.597 million b/d.
Greater refinery activity outweighed upticks in imports and domestic production, pulling crude stocks slightly lower last week.
Crude runs increased 182,000 b/d last week to 15.552 million b/d. Refinery utilization increased 0.6 percentage point to 85.6% of capacity.
Imports rose 109,000 b/d last week to 7.016 million b/d, but that was still well below the year-to-date average of nearly 7.9 million b/d.
"It was a bullish report, but the market is focused on [OPEC's] November meeting and maybe the crude draw wasn't big enough to overcome that," said Ryan McKay, commodity strategist at TD Securities.
"There is a fear that all these countries are trying to position their negotiating power going into the November meeting. Those headlines are keeping oil depressed," he said.
Iraqi oil officials, for example, now want a higher allocation within any OPEC production deal or else will seek an exemption, claiming the revenue is needed to battle Islamic State militants.
OPEC members hope to finalize a preliminary freeze agreement at the group's November 30 meeting in Vienna.
GASOLINE, DISTILLATE STOCKS DRAW
US distillate stocks fell 3.322 million barrels to 152.378 million barrels in the week ending October 21, EIA said. Analysts were looking for a draw of 1.9 million barrels.
Distillate inventories have declined five straight weeks, consistent with seasonal trends as autumn refinery maintenance helps pull stocks lower. Gasoline stocks declined 1.989 million barrels to 226.011 million barrels, versus analysts' expectations for a draw of 1.5 million barrels.
Implied demand rebounded strongly, up 320,000 b/d to 9.118 million b/d, coming one week after demand had plummeted to its lowest level since January.
