WASHINGTON (dpa-AFX) - Crude oil futures failed to hold early gains and settled lower on Wednesday, despite a report from the Energy Information Administration showing a less than expected drop in U.S. crude inventories in the week ended December 7.
An unexpected cut in oil supply from Libya and the drop in U.S. crude stockpiles lifted crude oil futures up sharply earlier in the session.
However, prices retreated towards the closing minutes due to demand growth concerns and oil futures eventually ended the session on a negative note.
Crude oil futures for January delivery ended down $0.50, or 1%, at 51.15 a barrel, well off the session's high of 52.84 a barrel.
On Tuesday, crude oil futures for January ended up $0.65, or 1.3%, at $51.65 a barrel.
According to EIA data, crude oil stockpiles in the U.S. dropped by about 1.21 million barrels last week, almost three times lower than the expected level.
In the previous week, crude stockpiles fell by 7.32 million barrels, dropping for the fist time in eleven weeks.
The EIA report showed gasoline inventories were up by 2.09 million barrels last week, higher than an expected increase of about 2.5 million barrels. Meanwhile, distillate stockpiles were down by 1.48 million barrels.
On Tuesday, the American Petroleum Institute released its weekly oil report, which said crude inventories in the U.S. fell by 10.2 million barrels last week.
Earlier this week, the EIA reduced its oil-price forecasts for this year and next, following the recent price declines that came ahead of Friday's decision by the Organization of the Petroleum Exporting Countries and some non-member allies to cut production starting in January.
Meanwhile, OPEC is of the view that crude prices may find it tough to rebound. It has lowered demand expectations for its crude in 2019 to 31.44 million barrels per day, 100,000 less than earlier prediction, due to increased supply by non-OPEC oil producers and economic slowdown.
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