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Oil lower after EIA data shows gasoline stocks build

An oil refinery is seen with the Rocky Mountains freshly covered with snow in the background in Denver October 14, 2014. REUTERS/Rick Wilking/Files

By Robert Gibbons

NEW YORK (Reuters) - Crude oil and refined products futures turned lower on Wednesday in volatile trading after government data showed a surprise gasoline inventory build last week, even as production eased.

Concerns about Greece's debt problems and the potential effect on Europe's demand for petroleum also helped pressure crude futures.

U.S. gasoline inventories rose unexpectedly and crude oil stocks at the Cushing, Oklahoma, hub rose for the first time since April, while refinery utilization fell, the Energy Information Administration (EIA) said on Wednesday.

"The decline in refinery utilization is also bearish for crude oil price, since any diminution in demand will cause the recent trend of crude oil inventory declines to reverse," said John Kilduff, partner at Again Capital LLC in New York.

Crude inventories fell by 2.7 million barrels, the EIA said.

While the EIA's slip was more than the expected draw of 1.7 million barrels, the drop was less than the 2.9-million-barrel slide reported on Tuesday by industry group American Petroleum Institute (API).

Brent August crude was down 90 cents at $62.80 a barrel, having swung from $62.66 to $65.47.

Brent retreated back below its 50-day moving average of $64.16.

U.S. July crude was down $1 at $58.97, off its $61.38 intraday peak.

U.S. July RBOB gasoline fell 4.65 cents at $2.0780 a gallon, after soaring to $2.1858, the strongest front-month price since November.

The EIA showed gasoline stocks rose by 460,000 barrels, compared with expectations in a Reuters poll for a 314,000-barrel drop and in sharp contrast to the fall of 2.9 million barrels reported by the API.

"The gasoline inventory number disappointed and then the market also refocused on Greece and Europe's situation and the potential for demand to be hit," said Phil Flynn, analyst at Price Futures Group in Chicago.

The Greek central bank warned on Wednesday that the country risked a painful exit from the euro and the European Union if Athens and its creditors do not strike a swift aid-for-reforms deal.

U.S. ultra-low sulfur diesel (ULSD) futures also pared gains and turned lower, though the inventory build reported by EIA was less than expectations.

Oil and equities traders on Wednesday awaited a Federal Reserve statement that could provide hints on the timing of an interest rate hike.

If the Fed cites concerns about Greece and signals any delay in planned rate hikes, oil might be supported on the perceived boost to liquidity, analysts said.

(Additional reporting by Simon Falush in London and Henning Gloystein in Singapore; Editing by David Goodman and Chris Reese)