Oil falling again after government report shows U.S. supplies growing

4/13/2011

NEW YORK — Oil gave up its early gains on Wednesday and headed down again, after the Energy Department reported the nation's crude supplies grew again last week.

Benchmark crude for May delivery fell 18 cents to $106.07 per barrel in afternoon trading on the New York Mercantile Exchange. The contract fell 6 percent on Monday and Tuesday.

The Energy Information Administration said the nation's crude supplies rose by 1.6 million barrels last week to 359.3 million barrels. That's 1.5 percent above year-ago levels.

Gasoline supplies dropped by 7 million barrels — more than five times what analysts expected. Supplies of distillate fuels, which include diesel and jet fuel, also unexpectedly declined by 2.7 million barrels.

Shrinking supplies of gasoline, diesel and other refined fuels can boost demand for crude, but analyst and trader Stephen Schork pointed out that the drop is partially due to a temporary shutdown at Sunoco's Marcus Hook refinery in Pennsylvania.

Wholesale gasoline demand fell by 1.6 percent when compared with the same period last year. The drop in gasoline demand adds to what some economists say is an overall slowdown in American driving in the face of rising gasoline prices. MasterCard SpendingPulse, which tracks spending at 140,000 service stations around the country, said late Tuesday that motorists have bought less gas for six weeks in a row.

Meanwhile, gasoline pump prices continued to climb. The national average added nearly 2 cents on Wednesday, to hit $3.808 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular costs 25 cents more than a month ago and is 95 cents higher than last year.

In other Nymex trading for May contracts, heating oil was virtually unchanged at $3.1725 per gallon, while gasoline futures gained 5 cents at $3.2134 a gallon. Natural gas futures added 5 cents at $4.147 per 1,000 cubic feet.

In London, Brent crude rose 19 cents to $120.62 per barrel on the ICE Futures exchange.