NEW YORK: Oil prices fell Wednesday after the government reported U.S. crude oil supplies rose last week, and new data showed OPEC production was the highest in more than two years.
Benchmark WTI crude for March delivery fell 23 cents to settle at $86.71 a barrel on the New York Mercantile Exchange. In London, Brent crude rose $1.80 to settle at $102.32 per barrel on the ICE Futures exchange.
Supplies of oil and gasoline in the U.S. are rising, while demand for energy products remains weak. The economy is getting stronger, but businesses have been slow to increase hiring. The employment rate remains high which means fewer commuters on the road to buy gasoline.
The price of oil has also been affected by signs that Saudi Arabia and other OPEC nations are raising production to keep the price from going too high and slowing the global economic recovery. According to a new report from Platts, the energy information arm of McGraw-Hill Co., OPEC crude oil production last month averaged 29.57 million barrels per day. That's the highest level in two years.
The Energy Department said Wednesday that U.S. crude oil supplies increased last week by 1.9 million barrels to 345.1 million barrels. That was below the 2.4 million barrels rise that analysts expected, according to Platts.
One of the biggest increases in crude came on the West Coast. Oil shipments from the trans-Alaska pipeline picked up after it closed temporarily last month because of a leak. That was offset by an unexpected drop in supplies at Cushing, Oklahoma, according to the government report. Cushing is the delivery point for benchmark West Texas Intermediate traded on the Nymex.
Gasoline supplies increased 4.7 million barrels to 240.9 million barrels, the highest level since March 1990. Demand for gasoline over the past four weeks fell 0.3 percentage point to an average of 8.6 million barrels a day. Pump prices have remained high, above $3 a gallon in many parts of the U.S.
Supplies of distillate fuel, which include diesel and heating oil, increased by 300,000 barrels to 164.4 million barrels.
Energy analyst Jim Ritterbusch said traders continue to be concerned about potential supply disruptions because of tension in Egypt and other Middle East countries. There also are concerns about North Sea supplies of Brent crude oil, which has caused its price to rise higher than benchmark WTI crude.
In other Nymex trading in March contracts, heating oil rose 3.71 cents to settle at $2.7689 a gallon, gasoline gained 3.18 cents to settle at $2.5260 a gallon and natural gas added 0.4 cent to settle at $4.044 per 1,000 cubic feet. AP
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