NEW YORK (CNNMoney.com) - Oil prices slipped below $63 a barrel Thursday afternoon after the government reported a less-than-expected drop in crude inventories, while natural gas stocks sank further after a surprise build in supplies last week.

U.S. light sweet crude for February delivery fell below the $63 mark after the Energy Information Administration released its report, down 62 cents to $62.80 a barrel.

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Crude oil inventories fell by 1 million barrels for the week ended Dec. 30, versus forecasts for a drop of 1.25 million barrels according to analysts polled by Briefing.com. At 321.6 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year, and around 12.5 percent above last year's levels, according to the report.

U.S. natural gas stocks rose 1 billion cubic feet last week, the EIA said, confounding analysts who had forecast a decline of 59 billion cubic feet.

Natural gas futures for February delivery fell for a third straight day, down 68.7 cents to $9.51 per million British thermal units. Just before the release of the storage data, the spot contract was trading in the $9.84 area.

"The real shocker is that there was a build of 1 billion cubic feet of natural gas at this time of year," Jason Schenker, analyst at Wachovia Bank, told Reuters.

Analysts such as Peter Beutel, an oil analyst and president of Cameron Hanover, emphasized that the surprising build in natural gas inventories also weighed on crude prices.

"To see a build of 1 bcf, even though it is January and we're supposed to be drawing this stuff down just boggles the mind," he said.

Meanwhile, total motor gasoline inventories increased by 1.4 million barrels last week, compared to the forecasted 400,000 barrel rise, putting them in the lower half of the average range.

And inventories of distillate fuel, used for heating, rose by 2.1 million barrels last week, and are in the lower half of the average range for this time of year. Briefing.com estimated that distillates would climb by 300,000 barrels.

Oil prices climbed earlier this week following a natural gas dispute between Russia and Ukraine, which temporarily halted supplies to Europe. The two countries have since settled the disagreement, signing a five-year deal.

--from staff and wire reports

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