Oil loses steam as US stockpile tumble gives way to demand fears

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Crude oil ended virtually flat on Wednesday, after a report showed declining U.S. gasoline demand in the world's top oil consumer and a build at the key Cushing, Oklahoma storage hub.

In its weekly report, the U.S. Energy Information Administration said U.S. crude oil stocks fell by a greater-than-expected 2.07 million barrels last week, but inventories at Cushing, the delivery point for U.S. crude futures, rose 508,000 barrels. The four-week average for gasoline demand fell by 1.4 percent year-over-year.

Additionally, U.S. crude failed to break through Tuesday's lows or highs, testing resistance at both ends in what traders call an "inside day." U.S. crude gained 2 cents to settle at $93.88 a barrel, after settling 51 cents higher on Tuesday on stronger U.S. economic data.

Brent crude for October delivery rose by 20 cents to near $102 a barrel after earlier rising to $103.07. Its premium to West Texas Intermediate widened 15 cents to $8.79 a barrel, having hit to its largest in two months on Monday at $9.41.

Geopolitical risk premium gone from oil: Pro
Geopolitical risk premium gone from oil: Pro

Oil benchmarks on both sides of the Atlantic have fallen by more than 10 percent since mid-June and remain on track to post a second monthly fall against a backdrop of lower imports by the United States and slowing growth in China and Europe.

Traders were watching to see whether the Buzzard oilfield in the North Sea, one of the biggest contributors to physical supplies underpinning Brent futures contracts, would return quickly after shutting again for additional maintenance. Industry sources said the field was due to resume exports on Thursday after output was stopped for work on a drilling rig. It had restarted Monday after being shut for maintenance since July.

Global oil supplies have been ample for much of the summer, capping price gains spurred by violence in OPEC members Iraq and Libya.

--By Reuters