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Oil fell one per cent to about $58 a barrel on Wednesday as big declines in US fuel inventories failed to quell doubts about Opec supply cuts and concern about a slowdown in the world's biggest economy.
US crude was down 63 cents at $58.10 a barrel by 1632 GMT, extending an earlier decline. London's Brent crude declined by 73 cents to $58.30.
The weekly snapshot of oil supplies in the United States, the world's top consumer, showed stocks of distillates, which include winter heating oil, and petrol fell more than expected last week.
But it also showed that US oil refineries handled more crude than expected. Refinery runs jumped 2.7 percentage points, versus a forecast gain of 0.7 percentage points.
"It's a somewhat bullish report -- there was a build in crude but draws in products," said Peter Beutel, analyst at Cameron Hanover.
"But longer term I think this is a bearish report because of the increase in refinery utilisation, which means the product draws are a temporary phenomenon."
Oil had fallen earlier on Wednesday, pressured by a survey showing US factory activity slowed more than expected last month and doubts about the depth of Opec's pledged supply curbs.
Since the start of October US oil has traded between $56.55 and $61.79 a barrel, waiting for a clearer picture of Opec supplies on the one hand and US demand on the other.
The Organisation of the Petroleum Exporting Countries' first output curbs since 2004 come into effect on Nov. 1, but many analysts and traders doubt the organisation's ability to enforce the 1.2 million barrels per day reduction.
Refiners say only Saudi Arabia and the United Arab Emirates have told them supplies will be reduced. Indonesia, a net importer, has broken ranks to say it should be exempt.
"It's unlikely that we'll see full implementation, but that's not important because the Saudis have committed to their reduction," said Bansei Securities analyst Makoto Takeda.
"There is a likelihood of a further cut in December, so traders are nervous about selling further."
Oil traders say Opec member Nigeria will actually increase its exports in December.
- REUTERS
