U.S. light crude for October delivery lost 51 cents to $60.50 a barrel on the New York Mercantile Exchange, having traded as low as $60.10. Oil traded up 60 cents just prior to the report's release.
In its weekly inventory report, the Energy Information Administration said crude stocks slipped by 100,000 barrels last week. Analysts were looking for a decline of 1.7 million barrels, according to Reuters.
Gasoline supplies swelled by 6.3 million barrels, while distillates, used to make heating oil and diesel fuel, rose by 2.6 million barrels. Analysts were looking for a 500,000 barrel increase in gasoline supplies and a 2.3 million barrel build in distillates.
EIA attributed the surprisingly strong build in gasoline supplies to higher imports and strong production at U.S. refineries.
The agency said gasoline supplies are now above average for this time of year, while crude and distillate stocks are "well above average."
Oil prices have stabilized, trading around $60 a barrel for the past few days, after a steep drop in price over the last couple of weeks prompted murmurings from OPEC and industry analysts that the cartel may soon cut production.
The cartel, which controls over one-third of the world's crude output, left production running at full tilt at its last meeting Sept. 11. But at that point crude prices had already fallen by over $10, and ministers agreed to leave open the possibility of a snap decision to cut production even before the group's next regularly scheduled meeting, which is set for Dec. 14 in Nigeria.
And OPEC official told Reuters Wednesday that ministers are consulting over oil's recent price slide, but they have not yet decided whether to hold an emergency meeting.
Edmund Daukoru, president of the Organization of the Petroleum Exporting Countries, on Tuesday told Reuters "something must be done" to steady the market and that the group was already talking about the price drop.
Asked whether OPEC would cut production at its December meeting, Daukoru said: "Something needs to be done to steady the price. That's all I can say."
Some in OPEC see no need to act yet. Kuwait's oil minister told Reuters OPEC was not inclined to cut its production now. A Libyan official told the news agency he was not very worried about a sharp price drop.
"Prices are still at good levels," Kuwait's Energy Minister Sheikh Ali al-Jarrah al-Sabah told Dubai-based Al Arabiya television, according to Reuters. Matters would be left for the next OPEC meeting, he said.
Crude has fallen over 23 percent from a record trading high of $78.40 in July, selling off rapidly over the last couple of weeks.
Several factors have contributed to oil's slide, including the end of the summer driving season in the U.S., an easing of tensions in the Middle East, brimming stockpiles, predictions for a warm winter, an as-yet mild hurricane season, and the withdrawal of some speculative investment money from the market.
Oil prices are now slightly lower for the year, although they remain more than three times higher than at the beginning of 2002.
How much further prices will fall is a mater of debate. Some argue a slowing economy in the U.S., combined with the cyclical nature of the commodity business, mean oil prices could fall into the $40s.
Others point to still-growing worldwide demand, production levels that remain tight, and these OPEC remarks as evidence that crude is unlikely to fall much below $60 a barrel anytime soon.
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