Oil rises as U.S. inventories drop again, gasoline off

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Brent crude inched higher on Wednesday while gasoline prices fell slightly after the U.S. Energy Information Administration reported further draws in American crude stockpiles and larger-than-expected increases in gasoline inventories.

The EIA's weekly petroleum data showed a 6.9 million barrel decrease in American crude stockpiles, extending declines over the last three weeks to more than 27 million barrels, the biggest three-week decline on record.

The drop came as imports of crude remained under pressure, sending oil prices up in the minutes after the report, even as the data put pressure on gasoline futures.

"People got nervous when they saw the crude data, but overall it looks like bearish report," said Phil Flynn, an analyst at Price Futures Group in Chicago.

"Last week products drove us higher amid concerns about refinery outages and supply, so to see a surprise build in both gasoline and distillates eased some of the concerns that we had."

Gasoline stockpiles declined after the EIA reported a large 3 million barrel build in U.S. inventories. Futures prices came off a four-month high hit on Tuesday.

Brent crude traded up 47 cents to settle at $108.61 a barrel.

West Texas Intermediate gained 48 cents to settle at $106.48 a barrel. RBOB gasoline fell for the first time in three days, down just over 2 cents to $3.1101 a gallon.

Technicians have said that both WTI and RBOB were looking poised for a correction, as both contracts have traded over 70 on the relative strength index (RSI) in recent sessions, a level generally seen as a sign a commodity has been overbought.

Analysts said that Federal Reserve Chairman Ben Bernanke's lukewarm statement about the central bank's plans to roll back its economic stimulus did not move the market.

"For now, the reaction in the oil market is pretty muted," said Olivier Jakob of Petromatrix in Zug, Switzerland.

"There's no big change in Bernanke's prepared comments. It's still all about a potential reducing of bond buying by the end of the year."

Investors remain concerned about interruptions to supplies from major exporters such as Libya. Armed protesters stormed the eastern Libyan oil port of Zueitina demanding a halt in export operations, a witness said.



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