By Alison Sider

Crude prices fell Wednesday after weekly government showed large builds in U.S. supplies of crude oil and fuel.

U.S. crude futures settled down 43 cents, or 0.81%, at $52.75, after wavering between gains and losses throughout the day. Brent, the global benchmark, fell 36 cents, or 0.65%, to $55.08 a barrel on London's ICE Futures Exchange.

U.S. commercial crude inventories grew by 2.8 million-barrel in the week ended Jan. 20, the U.S. Energy Information Administration said Wednesday. That is more than the 2.1 million-barrel increase predicted by traders and analysts surveyed by The Wall Street Journal, but roughly in line with the 2.9 million barrel build reported Tuesday evening by an industry group.

The EIA also reported that gasoline inventories surged by 6.8 million barrels last week -- an unexpectedly large build even as refiners slowed their production. That could signal lower demand, analysts said.

"That's what's concerning -- is there really a decline on a consumer end? It looks like there is," said John Kilduff, founding partner of Again Capital. "It was just an overwhelming bearish inventory report."

Crude prices traded higher at times Wednesday as the Dow Jones Industrial Average hit 20000 for the first time and as market participants traded the spread between oil and fuel -- selling refined products and buying crude, brokers and analysts said.

But speculators have built up a bullish position so large that it makes the market vulnerable to losses as they close out trades, which may be one reason oil prices couldn't sustain the movehigher, said Donald Morton, senior vice president at Herbert J. Sims Co., who runs an energy trading desk.

"There's tremendous speculative length in the market, and days like today will wash some of it out," Mr. Morton said.

Oil has traded within a relatively tight range for most of January, compared with recent months, as investors have priced in production cuts planned by the Organization of the Petroleum Exporting Countries in November. The deal, along with additional cuts agreed by non-OPEC producers, has since lifted oil prices around 20%.

But persistently high inventories of crude and fuel in the U.S. could hamper OPEC's efforts to bring supply and demand into balance. And the price rebound has spurred an increase in drilling by U.S. shale producers. U.S. crude production ticked higher by 17,000 barrels a day, according to the new EIA data.

"This is not the kind of story OPEC wants to see," said Bob Yawger, director of the futures division at Mizuho Securities USA. "A high crude number, a higher domestic production number, refineries pulling back on utilization and still getting a load of gasoline -- they're probably not happy," Mr. Yawger said.

Gasoline futures fell 5.21 cents, or 3.31%, to $1.5238 a gallon. Diesel futures settled down 3.01 cents, or 1.83%, to $1.6114 a gallon.

Sarah McFarlane

and Dan Strumpf contributed to this article.

Write to Alison Sider at

(END) Dow Jones Newswires

January 25, 2017 16:33 ET (21:33 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.