Oil adds to sharp losses after inventory data

SAN FRANCISCO (MarketWatch) � Oil futures fell Thursday, as a rising dollar and economic data fueled demand concerns, but prices pared losses after U.S. government data showed sizable declines in last week�s gasoline and distillate supplies.

April crude oil CLJ3 �lost $1.94, or 2%, to trade at $93.28 a barrel on the Comex division of the New York Mercantile Exchange. It traded around $93 just ahead of the government supply figures. Front-month futures prices haven�t settled below $94 in more than five weeks, according to FactSet data.

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The U.S. Energy Information Administration reported on Thursday a bigger-than-expected climb in last week�s crude inventories, but also showed a sizable drop in gasoline supplies.

Crude supplies rose by 4.1 million barrels for the week ended Feb. 15. Analysts polled by Platts expected a 2 million-barrel climb.

Motor gasoline supplies fell 2.9 million barrels, while distillate stockpiles declined by 2.3 million barrels, the EIA report said. Analysts expected declines of 1.4 million barrels each for gasoline and distillate supplies.

�EIA data continued to show how well supplied we are in the crude markets,� said Tariq Zahir, managing member at Tyche Capital Advisors. �The product markets did see a bigger-than-expected draw which did not surprise us due to the maintenance that is underway with refiners.�

At last check, March heating oil HOH3 slipped 4 cents, or 1.3%, to $3.11 a gallon, while March gasoline RBH3 �fell 1 cent or 0.3%, to $3.05 a gallon, recouping some of its earlier losses after having fallen to as low as $2.98.

Late Wednesday, American Petroleum Institute reported a 3 million-barrel climb in crude stockpiles. Read: API reports 3 million-barrel rise in crude supply.

April crude had dropped 1.9% Wednesday, partly due to concern over a large block of sales, as well as talk that Saudi Arabia may raise its crude production. Read: Oil ends lower; large trade spurs fund speculation.

Meanwhile, rival London-traded April Brent North Sea crude UK:LCOJ3 on Thursday fell $1.51, or 1.3%, to $114.09 a barrel on ICE Futures.

Losses in oil spurred a decline in the United States Oil Fund USO , which was down 1.5% late Thursday morning.

Data demand hints

Demand concerns were also in the spotlight for oil.

The preliminary composite purchasing-managers� index, or PMI, for the euro zone slumped to a two-month low of 47.3 in February, indicating the region�s downturn steepened further. Economists surveyed by Dow Jones Newswires had forecast a February reading of 48.5. See: Euro-zone Feb. PMI signals steeper downturn

In the U.S., economic data was mixed, with jobless claims last week climbing more than expected, while consumer inflation was unchanged in January. See: Consumer inflation unchanged in January.