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Oil ends below $62
Inventory report surprises analysts expecting another week of gains by showing a supply drop of 1.3 million barrels.

NEW YORK (CNNMoney.com) - Oil prices settled below $62 Wednesday after the government said that crude oil inventories declined last week, surprising industry observers.

U.S. light crude for May delivery fell 57 cents to $61.77 a barrel on the New York Mercantile Exchange. Just before the Energy Information Administration released its weekly report, the contract was down 14 cents at $62.20. (Full story)

Crude oil inventories fell by 1.3 million barrels for the week ended March 17, the government said, versus forecasts for a rise of 2.5 million barrels, according to a survey of analysts conducted by Reuters.

At 338.6 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year.

"There hasn't been a strong relationship between inventory data and crude prices in some time. Inventories are at pretty high historical levels," said Michael Darda, chief economist at MKM Partners.

"What we have is inventory hoarding going on -- because of terrorism and disruption concerns -- which is partly why strong inventories are correlated with high crude prices."

Last week, crude inventories reached a level not seen in nearly seven years.

Darda expects oil prices to stay high so long as the global economy is going strong, but said that if international interest rates climbed significantly or global growth slowed, prices could fall back closer to $50.

"There is some froth in the price, but it's probably not more than $10," he said.

Gasoline inventories fell by 2.3 million barrels last week, but remain above the upper end of the average range. Gasoline inventories were expected to fall 1 million barrels, according to a Reuters survey.

The last month has seen high gasoline demand -- an average of nearly 9.1 million barrels daily -- or 1.6 percent above the same period last year.

Inventories of distillate fuel used for heating fell 800,000 barrels last week, but remain above the upper end of the average range for this time of year. Reuters reported that distillates were expected by analysts to drop by 2 million barrels.

U.S. refineries operated at 87 percent of their capacity last week.

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Wholesale prices took their biggest tumble in 3 years, led by energy. Full story.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.