Oil slides toward $57 on signs U.S. gasoline stockpiles expanded

World oil prices up

Traders said prices fell after an American Petroleum Institute report on Tuesday showed a 9.2-million-barrel rise in gasoline stocks in the week ended December 1 and an increase of 4.3 million barrels in distillate inventories, which include motor diesel and heating oil.

The perception that the higher fuel stocks pointed to weak demand outweighed a drop in crude inventories by 5.5 million barrels to 451.8 million barrels, traders said.

Traders expect data from the API and EIA to show crude stocks fell 3.5 million barrels last week.

Brent crude futures were down 48 cents at $62.38 a barrel, down 2% since last Wednesday, while United States crude futures were off 46 cents at $57.16 a barrel, CNBC reported.

At the Multi Commodity Exchange, crude oil for delivery in December was trading sharply lower by Rs 26, or 0.70 per cent, to Rs 3,698 per barrel in 1,601 lots.

While the offsetting products build cuts into bullish oil sentiments somewhat, the weekly development still contributes to the nation's and world's slow rebalancing of oil supply and demand following nearly two years of glut that caused crude prices to crash.

Information released Wednesday by the Energy Information Administration showed USA crude oil inventories decreased by 5.6 million barrels last week. Heating oil, a proxy for diesel, lost 2.6 percent to $1.8650 a gallon.

Refiners "actually beat demand with [gasoline] production at a near record 9.758 million barrels a day, compared to daily demand of 8.895 million barrels a day last week", said Phil Flynn, senior market analyst at Price Futures Group.

USA crude production rose to 9.7 million barrels per day, another weekly record, though short of all-time records reached in the 1970s.

"The sentiment-driven support to crude oil prices has somewhat dissipated as market participants look beyond last week's OPEC meeting", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London. An extension had been largely priced in but rising US oil production has been a key concern for the market. Back in September 2015, he forecast crude would slump to between $25 and $30, five months before prices dipped to around $26.

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