U.S. crude oil futures ended lower for the third day in a row on Wednesday after government data showed supplies last week rose within market forecasts.
Gasoline futures finished lower as well, even though inventories fell for the 12th consecutive week, as the draw was in line with market expectations. Supplies dropped as imports fell, even though production rose amid refinery restarts.
Distillate futures fell sharply despite an unexpected small draw, which defied forecasts for a stock build.
On the New York Mercantile Exchange, June crude fell 72 cents or 1.1% to settle at $63.68 after moving $63.05 to $64.67 . The front month contract has fallen four of the last five sessions to its lowest settle since April 20.
In London, June Brent crude was also down , trading from $65.59 to $67.41.
NYMEX June RBOB gasoline pared losses at the end of the day and settled down 1.21 cents at $2.2326 after trading from $2.19 to $2.2490.
Gasoline rose to $2.4550 on April 30, the highest since prices hit $2.4829 on May 12, 2006.
"A major correction is under way," said Mike Fitzpatrick, vice president at Man Financial. "The market had clearly gotten ahead of itself but needs further refinery news to keep upward momentum going."
The U.S. Energy Information Administration said that gasoline stocks fell 1.1 million barrels to 193.1 million barrels in the week to April 27, shrinking 34.1 million barrels, or 15%, since the week to Feb. 2.
Gasoline stocks are at their lowest level since stocks dropped to 192.8 million barrels in October 2005. Analysts polled by Reuters had expected a 1.0 million barrel drawdown.
Gasoline imports fell by 12,000 barrels a day, or 1%, to 1.15 million bpd, while production rose 241,000 bpd, or 2.8%, to nearly 8.8 million bpd. Demand rose 97,000 bpd, or 1.1%, to nearly 9.3 million bpd.
Reflecting restarts, refinery runs increased 0.5 percentage point to 88.3% of capacity, near forecasts for an 0.7 percentage point rise in the Reuters poll.
"I still think we have to see a sustained recovery in runs ... gasoline prices will be supported in coming weeks until we see a sustained recovery in runs and inventories start to build, which we haven't seen yet," said Eric Wittenauer, analyst at A.G. Edwards in St. Louis, Missouri. "The (gasoline) market remains tight."
Crude stocks rose 1.1 million barrels to 335.6 million barrels, up for the second week in a row. Analysts polled by Reuters expected a 1.0-million-barrel build.
Domestic production fell 39,000 bpd, or 0.8%, to 5.09 million bpd, while imports jumped 229,000 bpd, or 2.3%, to nearly 10.3 million bpd.
Distillate stocks dropped 200,000 barrels to 117.1 million barrels, after being unchanged in the previous week, against the forecast for a 400,00-barrel rise in the Reuters poll.
Heating oil stocks fell, but diesel fuel supply increased, causing the overall build.
Distillate imports rose 27,000 bpd, or 8.7%, to 337,000 bpd, while production fell 27,000 bpd, or 0.7%, to nearly 4.1 million bpd. Demand edged up 29,000 bpd, or 0.7%, to nearly 4.3 million bpd.
In U.S. refinery news, Valero Energy said on Wednesday there was no material impact to production at its 170,000 bpd San Francisco Bay-area refinery in Benicia, California, from a Tuesday afternoon upset caused by a brief electrical power interruption.
OPEC power Saudi Arabia is on track to raise capacity to 12.5 million bpd by 2009, but does not envisage having to go beyond that level due to increased energy conservation, its oil minister said on Wednesday.
"Our feeling now, with this thrust and push for conservation, efficiency and the use of alternatives, is that we probably need not go beyond 12.5 million barrels per day," Ali al-Naimi told reporters in Riyadh.
OPEC Secretary General Abdullah al-Badri said on Wednesday there was no need for OPEC to increase its production this year as the market was stable.