Oil slides as gasoline inventories build

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The oil price got an early lift from comments by the secretary-general of the Organization of the Petroleum Exporting Countries, who said the group was committed to restoring market stability by bringing global inventories down to the industry's five-year average.

More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis showed.

OPEC and other producers such as Russian Federation agreed to cut output by almost 1.8 million barrels per day in the first half of 2017 to drain a supply overhang that has persisted for nearly three years.

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The American Petroleum Institute will release its weekly crude oil inventory report this afternoon.

Oil dropped to a two-week low after a report showed USA gasoline supplies gained for the first time in nine weeks as crude output rose.

"Crude oil prices were slightly weaker as the focus turned back to US inventories and output", ANZ bank said on Wednesday.

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A reduction in commercial US crude stocks, which fell 1 million barrels last week to 532.34 million barrels, according to the US Energy Information Administration (EIA), also supported prices, traders said. Gasoline consumption also declined by about 1 percent to 9.3 million barrels.

US crude inventories, however, fell by 1.0 million barrels last week to 532.3 million barrels, said the EIA. Russian Federation and 10 other non-OPEC producers agreed to cut half as much. "This, along with the increasing rig count and another increase in the [drilled but uncompleted] well count (up another 111 wells), means that US production supply will continue to move up", he said. US WTI crude futures rose 1 cent to $52.66 a barrel. U.S. output, almost 55% of which comes from its seven major shale plays, averaged 9.25 million b/d in the week ended April 14, up almost half a million barrels a day versus the end of 2016, and around 820,000 b/d higher than the recent trough of July 2016, according to the latest EIA data.

Refineries processed 16.9 MMbopd, up 241,000 bbl from the prior week and the highest since the record 17.1 million was touched in January. Prices, which posted a gain of roughly 1.8% last week, settled at their worst level since April 7, FactSet data show.

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Distillate stockpiles, which include diesel and heating oil, fell by 2 million barrels, versus expectations for a 1 million-barrel drop, the EIA data showed.

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