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Oil Pares Gains on Bearish US Supply Report

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Oil futures gave up some gains Wednesday morning after the U.S. Energy Information Administration reported crude oil supplies increased last week by more than many analysts had expected.

U.S. crude oil inventories rose by 2.6 million barrels last week, according to EIA data, slightly more than Platts survey of analysts forecast for a 2.3 million barrel build in oil supplies. The EIA data is bearish compared to consensus estimates as well as Tuesday night's industry report from the American Petroleum Institute, which showed a 1.4 million barrel decline in weekly oil supplies.

(Read More: Weak Economy to Depress Oil Demand)

However, crude oil supplies declined by 1.5 million barrels at the hub for physical delivery of Nymex West Texas Intermediate oil futures in Cushing, Oklahoma. WTI futures fell below $93 a barrel.

The decline in Cushing oil inventories to the lowest level since last December is helping to support the U.S. oil price despite the gain in total crude oil supplies, traders say.

A larger-than-expected decline in weekly gasoline supplies may also be supportive of WTI oil prices as well as gasoline futures.

(Read More: Gasoline Prices Dip Again, Bringing Hopes for Relief)

—By CNBC's Sharon Epperson; Follow her on Twitter: @sharon_epperson

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