Oil prices pared losses Thursday morning, following a report showing U.S. crude stocks fell last week as refineries hiked output.
U.S. commercial crude inventories fell by 4.2 million barrels in the week ending May 25, compared with analysts' expectations for a decrease of 525,000 barrels. An earlier industry report had suggested stockpiles rose by one million barrels last week.
Late Thursday morning, U.S. West Texas Intermediate crude was down 19 cents at $68.02 U.S. a barrel. In the previous session, it settled up $1.48, or 2.2%, at $68.21 U.S. per barrel.
Brent crude was up $1.08 or 1.4%, at $78.58 per barrel, after settling the last session up 2.8%.
Slightly offsetting the big drop in crude stockpiles, gasoline stocks rose by 534,000 barrels, while distillate stockpiles, which include diesel and heating oil, jumped by 634,000 barrels. Inventories of both products were expected to fall by more than a million barrels.
The premium of Brent to WTI ballooned beyond $11.00 a barrel on Thursday, the largest since March 2015. That spread has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.
Crude futures surged on Wednesday on a report that the Organization of the Petroleum Exporting Countries might continue its deal with Russia and other producers to cap production. That tempered concerns following earlier reports that OPEC could ease the output limits at its June 22 meeting.
