--Crude lower as market balances inventory data, OPEC meeting
--EIA: Oil inventories fall by 200,000 barrels, refinery runs climb
--OPEC is expected to keep production elevated
By Dan Strumpf
NEW YORK--Oil futures gave back earlier gains Wednesday as traders weighed a drop in U.S. oil inventories with a coming decision on output by Organization of Petroleum Exporting Countries.
The group is widely expected to keep production levels unchanged at historically high levels when it meets in Vienna on Thursday.
Light, sweet crude for July delivery fell 47 cents, or 0.6%, to $82.85 barrel on the New York Mercantile Exchange, after rising as high as $84.01 earlier in the day.
Brent crude on ICE Futures Europe was 12 cents, or 0.1%, higher at $97.26 a barrel.
Futures had rallied earlier the session after the Energy Information Administration said U.S. oil inventories last week fell by 200,000 barrels. Stocks of both gasoline and distillates dropped sharply, while refineries ratcheted up operations, the EIA said.
But crude had given up its gains within two hours of the report, as signs emerged that OPEC members favored leaving the group's output ceiling unchanged. OPEC sources told Dow Jones Newswires that the group appeared to be crystallizing around that outcome, even as some ministers complained of oversupply.
"People are starting to figure in that there's not going to be a change in production by OPEC, and that's dragging down the crude right now," said Carl Larry, president of trading-advisory firm Oil Outlooks and Opinions.
OPEC's production was 31.582 million barrels a day in May, the group said this week. That's nearly 1.6 million barrels a day more than the group's total production limit agreed upon in December.
The increase has been largely driven by higher Saudi oil production this year to around 10 million barrels a day.
"I expect the production ceiling to be rolled over, but this is all subject to our discussions," said Kuwait oil minister Hani Hussain.
OPEC's output decisions are influential in setting global oil and fuel prices. The group produces around a third of the world's oil supply and holds more than 80% of global proven oil reserves.
"We're just waiting for the OPEC meeting to fall apart," said John Kilduff, founding partner at Again Capital in New York. "I think that's going to end in disarray... and the Saudis will stand firm on their willingness to pump."
Crude-oil prices have fallen more than 20% from their peak in the spring, as the deepening euro-zone crisis has spurred fears of slowing growth world-wide, and as demand remains weak in the U.S., the world's biggest consumer.
But a bright spot for U.S. demand emerged in Wednesday's inventory data.
Gasoline inventories last week fell by 1.7 million barrels, while stocks of distillates, including heating oil and diesel, dropped 100,000 barrels. Refineries raised output by 0.1 percentage to 92% of capacity.
Analysts had expected oil inventories to fall by 1.6 million barrels last week, according to a survey of analysts by Dow Jones Newswires. But gasoline inventories were seen rising 600,000 barrels, while distillates were expected to rise 900,000 barrels. Refinery runs were seen falling 0.1 percentage point to 90% of capacity.
The EIA's indirect measure of product demand rose 6.5% to its highest level since August, bucking a trend of weakening demand for petroleum products in the U.S.
Oil-market watchers closely follow the EIA's weekly inventory survey for cues on supply and demand in the world's biggest oil consumer. Inventories last month were at their highest level since 1990, amid persistently weak demand and sluggish economic growth.
Front-month July reformulated gasoline blendstock, or RBOB, recently rose 1.32 cents, or 0.5%, to $2.6634 a gallon. July heating oil fell 0.67 cents, or 0.3%, to $2.6148 a gallon.
--Hassan Hafidh contributed to this article
Write to Dan Strumpf at [email protected]