By Jenny W. Hsu

Oil prices fell in Asia trade Thursday after an industry group data showed U.S. crude inventories likely expanded last week, upending the market's expectations for lessened growth or a contraction.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $53.74 a barrel at 0211 GMT, down $0.32 in the Globex electronic session. February Brent crude on London's ICE Futures Exchange fell $0.19 to $56.03 a barrel.

According to data from industry group American Petroleum Institute, U.S. crude stocks rose by 4.2 million barrels in the week ended Dec. 23. The data also showed a decrease of 2.8 million barrels in gasoline stockpiles.

Analystssurveyed by The Wall Street Journal were expecting a 1.4 million barrel decline in crude supplies. Those surveyed by S&P Global forecasted a drawdown of 1.5 million barrels.

Official inventory data from the Energy Information Administration is due later today-- a day later than usual due to the holidays. Last week, the EIA reported growth of 2.3 million barrels in crude stocks.

"Both the unexpected build in crude stocks for last week and the reported decline in distillate and gasoline inventories for last week appear to be tied to an unexpected, counter-seasonal 604,000 barrels per day drop in refinery crude runs," said Tim Evans, a Citi Futures analyst.

The boom of U.S. unconventional oil production has been a major threat to the Organization of the Petroleum Exporting Countries, which supplies one-third of the global oil supply. For over two years, to counter the additional supplies coming from the U.S., the cartel members ramped uptheir production in a bid to protect their market shares and weed out some of their less-competitive U.S. rivals.

Analysts say the tactic has largely backfired. The increase in supplies quickly outpaced demand growth. Prices sunk as low as $26 a barrel earlier this year and several OPEC producers are suffering from tighter national budgets thanks to depressed oil prices. Meanwhile, production in the U.S. abated by less than expected. Last month, OPEC abandoned that strategy and agreed to cut their productions to jumpstart prices.

The production cut deal, which will commence in January, was also joined by 11 other non-OPEC players. If carried out successfully, the coordinated action could wipe out about 2% of the world's supply and send the market into a deficit as early as the first half of next year.

Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--rose 80 points to $1.6826 a gallon, while January diesel traded at $1.7013, 20 points higher.

ICE gasoil for January changed hands at $501.00 a metric ton, up $0.50 from Wednesday's settlement.

Write to Jenny W. Hsu at

(END) Dow Jones Newswires

December 28, 2016 22:24 ET (03:24 GMT)

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