Oil prices had been on a long rally for most of the latter half of the year in anticipation of a decision from the Organization of Petroleum Exporting Countries on what to do with a production cut agreement aimed at draining the surplus in global oil inventories.
The API report was also said to find that crude inventories slid by 5.48 million barrels last week and supplies at the key Cushing, Oklahoma, pipeline hub declined by 1.95 million barrels, the people said. Total volume traded was about 31 percent below the 100-day average.
"We were overdue a little bit of profit-taking and the build up in gasoline inventories was the flawless excuse to do just that", said Michael Hewson, chief market analyst at brokerage CMC Markets.
Oil prices plummeted today, witnessing a free fall as weak equities clubbed with persistent profit selling pressure after recent gains hurt the sentiments.
West Texas Intermediate for January delivery traded at $57.46 a barrel at 4:43 p.m. after settling at $57.62 a barrel on the New York Mercantile Exchange. An extension was largely priced in by the market and prices have reacted tepidly to the official decision. WTI settled at $57.62 on Tuesday and opened at $57.45 Wednesday morning. But if prices top their hedged positions, that could push USA producers into more drilling.
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The United States Oil ETF (NYSEARCA: USO) traded down about 1.5%, at $11.37 in a 52-week range of $8.65 to $12.00.
"Attention will no doubt be focused not only on inventories but also on USA crude oil production", according to analysts at Commerzbank.
Oil declined after industry data showed US gasoline stockpiles expanded for the first time in four weeks.
Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.95%, at $1.70 a gallon.