Crude inventories fell for the second week in a row, dropping by 2 million barrels to 445 million barrels in the week ended March 15, the EIA said, compared with analysts' expectations in a Reuters poll for a 13,000-barrel rise.
Gasoline stocks (USOILG=ECI), opens new tab continued a seventh straight week of drawdowns, falling by 3.3 million barrels to 230.8 million barrels, the EIA said. Analysts had projected a 1.3 million-barrel draw.
On the Gulf Coast, gasoline in storage fell by 1.82 million barrels to 76.58 million barrels, the lowest in three years, EIA data shows.
Oil futures broadly extended their losses after the report with Brent crude down $1.45, or 1.7%, at $85.93 a barrel by 11:19 a.m. EST (1519 GMT) and U.S. crude $1.77, or 2.1%, lower at $81.70 per barrel.
Despite the falling inventories, oil prices extended losses partly due to weaker gasoline demand, said Bob Yawger, director of energy futures at Mizuho.
"The rally we've seen in the past few weeks has been partially because of gasoline but those fundamentals aren't quite as strong," Yawger said.
Crude oil exports rose last week by 1.7 million bpd to 4.8 million bpd, resulting in net U.S. crude imports (USOICI=ECI), opens new tab falling by 947,000 bpd.
Refiners have started to ramp up activity in about the last month after severe winter weather and outages affected processing rates. Refinery crude runs (USOICR=ECI), opens new tab increased by 127,000 bpd and refinery utilization rates (USOIRU=ECI), opens new tab gained 1 percentage point in the week to 87.8% of total capacity.
Finished motor gasoline supplied, which represents demand, fell 235,000 barrels per day to 8.8 million bpd, which is the first time in three weeks it has dropped below 9 million bpd.
Distillate stockpiles (USOILD=ECI), opens new tab, which include diesel and heating oil, rose by 624,000 barrels to 118.5 million barrels, versus expectations for an 87,000 drop, EIA data showed.
