Oil prices eased on Wednesday in choppy, thin trading, pressured by record high stockpiles at the Cushing delivery point for U.S. crude even as Libya and Middle East uncertainty supported oil, which remained on track to end the first-quarter up more than 10 percent.
While gasoline inventories declined sharply and lifted U.S. gasoline futures, crude inventories rose more than expected last week and stocks at the Cushing, Oklahoma, hub jumped to a record high, according to the Energy Information Administration's weekly report.
Crude futures trading volumes well below three-day averages indicated traders remained comfortable on the sidelines as prices were buffeted by inventory data, the volatile Libyan conflict and unpredictable unrest in the Middle East.
Brent crude futures for May delivery fell 3 cents to settle at $115.13 a barrel, but more than $10 above their $94.75 price ending 2010.
U.S. May crude futures fell 52 cents to settle at $104.27 a barrel, swinging between $103.44 and $105.15, and more than $12 for the quarter.
On Monday, U.S. gasoline futures moved to a premium over heating oil for the first time since last August, and the premium is now trading at 2.44-cents a gallon based on Wednesday's settlements.
Gasoline futures' premium over heating oil reached 18 cents a gallon in 2010.
U.S. CRUDE STOCKS UP, GASOLINE DOWN
U.S. crude inventories rose a more-than-expected 2.95 million barrels last week, but gasoline inventories fell 2.7 million barrels, the EIA report said.
Distillate stocks, which include heating oil and diesel fuel, posted a slight gain against expectations of a dip.
In addition to the fact that the large speculators are still peeling off long positions in the crude oil, today's dichotomy between the crude and gasoline markets was driven by the weekly EIA report, Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
While recent drops in gasoline inventories reflect refiners draining winter grade fuel ahead of a specification switch and the summer driving season, analysts have noted resilient demand despite rising pump prices.
U.S. fuel exports also have soared, with the EIA reporting that finished gasoline exports in January were 87.3 percent higher than a year ago.
Helping limit oil losses was ADP's employment report showing the U.S. private sector added 201,000 jobs in March, with the data arriving ahead of Friday's closely watched government monthly payrolls report.
A weaker dollar <.DXY> also helped limit dollar-denominated oil losses. Dollar weakness can be supportive to oil by making it less expensive for buyers using other currencies and attracting investment away from foreign exchange markets.
Unrest in Yemen, Syria, and Bahrain and the fight in Libya has kept oil supply threats in focus, and analysts continue to point out demand uncertainties with quake-hit Japan, sagging U.S. consumer sentiment and euro zone debt problems.
OBAMA SEEKS LOWER OIL IMPORTS
Oil prices shrugged off President Barack Obama's speech proposing to cut U.S. oil imports by a third over 10 years, a goal that has eluded his predecessors.
The speech was short on details on how to curb U.S. energy demand and Obama did not pretend there were any speedy measures to lower fuel costs that he acknowledged were a big concern to Americans.
(Additional reporting by David Sheppard in New York, Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy and David Gregorio)