Oil dips as gasoline build offsets big U.S. crude draw

By Barani Krishnan NEW YORK (Reuters) - Oil prices fell almost 2 percent on Wednesday after a huge drawdown in U.S. crude stockpiles was offset by a larger-than-expected build in gasoline and distillates, which include diesel. Crude inventories fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June, according to U.S. government data that countered a Reuters poll of analysts calling a rise of 1 million barrels. Gasoline stocks also rose, by 1.7 million barrels versus forecasts for a 1.3 million-barrel drop, the data from the Energy Information Administration (EIA) showed. Distillates climbed by 1.4 million barrels, against expectations for a 1.0 million barrels increase. "The products builds are overwhelming the constructive crude draw," said Scott Shelton, commodities specialist at ICAP in Durham, North Carolina. U.S. crude's front-month contract settled down 71 cents, or 1.8 percent, at $38.60 a barrel. The front-month in Brent, the global oil benchmark, finished down 7 cents at $43.14, after initially trading higher right after the EIA data. Gasoline's front-month tumbled for a third straight session to 7-month lows, settling down 6 percent on the day and 12 percent on the week. Gasoline's crack, or premium that refiners make from turning a barrel of crude into the fuel, fell to its lowest in six months. Oil has lost a third of its value since June on high U.S. production, record crude pumping in the Middle East and concern about falling demand in Asian economies. On Monday, both crude oil benchmarks saw their lowest trades since early 2009, dropping as much as 6 percent in one session after heavy falls in equity markets. Some analysts think last week's decline in crude stocks is an aberration driven by a brief dip in imports. Many are bracing for a sustained rise in inventories in the coming months as U.S. refiners shut for seasonal work. "We had a draw, but the market needs to see weeks of that to be convinced," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York, concurred. "We feel today's numbers are not the start of a new trend. In a few weeks from now, we will look back at this draw as a one off," Zahir said, citing the end of the peak U.S. summer driving season amid record production of crude by key OPEC members. (Additional reporting by Lisa Barrington in London, Meeyoung Cho in Seoul and Henning Gloystein in Singapore; Editing by David Evans, Andrew Hay and Alan Crosby)