Crude had risen since late last week as tensions in Iraq, OPEC’s second-largest producer, led to the halt of production at two Kirkuk fields. The resulting export curbs pushed oil in the U.S. to a three-week high on Wednesday but Brent has failed to breach last month’s peak and dropped below $58 following the inventory data. Prices reflect “oil bulls taking profit after the supply disruption in Iraq failed to drive Brent to new highs,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “It’s a classic risk-off move. On balance, I believe yesterday’s EIA report was net bearish.” U.S. gasoline inventories expanded by 908,000 barrels last week, while distillate supplies climbed to 134.5 million barrels, according to the Energy Information Administration. Refinery utilization slipped as plants including Exxon Mobil Corp.’s Joliet refinery in Illinois were said to carry out maintenance. Click Read More below for additional information.

While U.S. crude inventories dropped to the lowest since October, gasoline stockpiles last week expanded for the first time since early June, indicating that consumption boosted by the summer driving season may be waning. OPEC’s rate of compliance with production cuts slipped last month to 75 percent, the lowest since the accord started in January, the IEA said. OPEC reported Thursday its output is increasing on more supplies from Libya, which is exempt from the deal. “Concerns about the persisting supply glut resurfaced after petro-nations reported growing oil output,” said Norbert Ruecker, head of commodities research at Julius Baer Group Ltd. in Zurich. “We maintain a neutral view and see oil prices trading sideways as growing shale output and stagnant western-world oil demand undermine the Middle East’s supply deal.” Click Read More below for more of the story.