NEW YORK: Oil futures fell more than 1pc on Wednesday, extending a more than 3pc drop in prices the previous session, after US government data showed large builds in refined product stockpiles.
Brent crude futures were down 82 cents, or 1.3pc, at $63.53 a barrel by 1:32 p.m. EDT (1732 GMT). U.S West Texas Intermediate (WTI) crude futures fell 99 cents, or 1.7pc, to $56.63 a barrel. Both benchmarks shed more than 3pc on Tuesday.
While data on Wednesday from the US Energy Information Administration showed a larger-than-expected drawdown in crude stockpiles last week, large builds in refined product inventories kept prices lower.
US crude inventories fell 3.1 million barrels, EIA data showed, more than analysts' forecasts for a decrease of 2.7 million barrels.
Gasoline stocks rose 3.6 million barrels, compared with analysts' expectations in a Reuters poll for a 925,000-barrel drop. Distillate stockpiles grew by 5.7 million barrels, much more than expectations for a 613,000-barrel increase, the EIA data showed.
"The focus this time of year is gasoline, and that data point was squarely bearish," said John Kilduff, a partner at Again Capital Management in New York.
Some of the EIA data was affected by Storm Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane.
More than half of daily crude production in the Gulf of Mexico remained offline on Tuesday, the Bureau of Safety and Environmental Enforcement (BSEE) said, as most oil companies were re-staffing facilities to resume production.
The US drilling regulator said 1.1 million barrels per day of oil, or 58pc of the region's total, remained shut.
Oil prices slumped on Tuesday on increased hopes for a return of Iranian crude to the global oil market after US President Donald Trump said progress had been made with Tehran, signalling tensions could ease in the Middle East.
However, Iran later denied it was willing to negotiate over its ballistic missile programme, contradicting a claim by US Secretary of State Mike Pompeo, and appearing to undercut Trump's statement.
"It is hard to believe that either the United States or the Iranian stance would change drastically, therefore yesterday's sell-off might turn out to be an excellent buying opportunity," PVM analysts wrote.
US officials say they are unsure whether an oil tanker towed into Iranian waters was seized by Iran or rescued after facing mechanical faults as Tehran asserts, creating a mystery at sea at a time of high tension in the Gulf.
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