Oil prices deepen losses after surprise build in U.S. inventories

Oil prices dropped Thursday, extending losses that came in the wake of fresh U.S. government data showing mounting petroleum stockpiles.

Brent crude LCOV8, -0.51% �, the global benchmark, was down 0.6% at $71.94 a barrel on London��s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLU8, -0.84% �were trading down 0.9% at $67.05 a barrel.

The U.S. Energy Information Administration said late Wednesday that U.S. crude oil inventories increased by 3.8 million barrels last week, to stand at 409 million barrels. Traders and analysts surveyed by The Wall Street Journal had predicted an average weekly decline of 2.2 million barrels.

Prices fell to their lowest level in almost six weeks after the data came out Wednesday.

��The build was driven by lower crude oil exports, which fell by 1.37 million barrels a day week-on-week,�� according to analysts at ING Bank.

Tamas Varga, an analyst at brokerage PVM Oil Associates, noted that total U.S. commercial oil inventories, including refined products, increased by more than 10 million barrels last week.

��They are still well below the historical norm, but the jump of this magnitude does not bode well for oil bulls,�� he said.

Prices have also come under pressure in recent weeks following a decision in late June by the Organization of the Petroleum Exporting Countries and partner producers like Russia to begin ramping up crude production after more than a year of holding back output. The move came in response to surging prices this spring �� buoyed by geopolitical risk to supply in Iran �� that saw Brent temporarily breach $80 a barrel.

Analysts at consultancy JBC Energy estimate that OPEC production rose 300,000 barrels a day month-on-month in July, with Saudi Arabia, the de-facto head of the oil cartel, the ��primary driver behind this growth.��

Russian energy officials have also reported production for last month rose, averaging 11.21 million barrels a day, compared with 11.07 million barrels a day in June.

Oil-market observers are looking ahead to weekly data from Baker Hughes on Friday on the number of rigs drilling for oil in the U.S., a key metric for activity in the sector.

Among refined products Thursday, Nymex reformulated gasoline blendstock RBU8, -0.74% ��� the benchmark gasoline contract �� was down 0.6% at $2.03 a gallon.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.