Oil prices dip after bearish US government report on crude supplies

Oil prices dipped on Wednesday after the U.S. government released bearish data on crude and fuel supplies ahead of the U.S. summer driving season, a period of higher demand.

Prices had earlier increased about 1% following reports Israel could be preparing to strike Iranian nuclear facilities that raised fears of a supply disruption in the Middle East.

Brent futures fell 12 cents to $65.26 a barrel by 1:12 p.m. EDT (1712 GMT). U.S. West Texas Intermediate crude dipped 9 cents to $61.94.

U.S. crude, gasoline and distillate inventories all posted surprise builds last week, according to the latest data from the Energy Information Administration on Wednesday.

Crude inventories rose by 1.3 million barrels, while gasoline stocks rose by about 800,000 barrels and distillate stockpiles added about 600,000 barrels.

"The EIA report saw builds for crude, gasoline and distillate, which market participants didn't like," said Giovanni Staunovo, an analyst at UBS.

The data caused oil futures to turn negative after finding support earlier in the session from a CNN report on Tuesday that U.S. intelligence suggests Israel is preparing to strike Iranian nuclear facilities. CNN cited multiple U.S. officials.