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Oil gets washed out by US stockpile jump; WTI ends lower

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Oil gave back most of the day's gains on Wednesday, as a surprise jump in U.S. crude inventories overwhelmed the impact of hopes that Organization of the Petroleum Exporting Countries (OPEC) would help reduce a global supply glut by cutting output.

The Department of Energy reported U.S. oil stockpiles soared by 3.6 million barrels in the latest week, more than the American Petroleum Institute's data that showed a surprise build of 3.3 million barrels in U.S. crude stocks. Both figures were far above analysts' expectations of a 1.6 million barrel draw.

The international benchmark sank to a 26-month low this week on rising supplies and signs of slower demand growth in China and Europe, but prices rallied after OPEC Secretary General Abdullah al-Badri said the group could trim its 2015 output target by 500,000 barrels per day (bpd).

Many OPEC countries need oil prices above $100 a barrel in order to meet their budget needs and analysts say Saudi Arabia, OPEC's biggest producer, could cut production in an effort to support prices. Any production cut by OPEC, due to meet in November, would be the group's first since 2008.

Brent crude fell 20 cents to under $99 a barrel, after closing up $2.40 in the previous session - the biggest daily gain since Sept. 3. U.S. crude shed 46 cents to settle at $94.42, after rising 2.1 percent on Tuesday.

Brent hit a high above $115 a barrel in June on concerns an Islamist insurgency in Iraq could hit oil output in OPEC's second biggest producer. But Iraqi oil exports have been steady and exports from Libya have risen sharply in recent weeks.

Rising U.S. oil production, mostly from shale, has also more than compensated for any lost output, creating a huge surplus in the Atlantic Basin and Asia.

--By Reuters, with CNBC.com