Oil fell Wednesday after the government said U.S. oil and gas supplies have grown more than expected, The Associated Press reports.
Benchmark crude for June delivery gave up 71 cents at $83.14 a barrel on the New York Mercantile Exchange. In London, Brent crude added 14 cents at $84.94 a barrel on the ICE futures exchange.
Crude prices, which have jumped more than 80 percent in the past year, have been a concern throughout the energy industry. The rise seems to be tracking the dollar and the direction of stocks on Wall Street, not American energy demand. As rising oil prices make gasoline and other fuels more expensive, analysts have wondered how consumers will respond.
“The economy is improving, but consumers have started to walk away from gasoline at prices they cannot afford,” analyst Stephen Schork said in his daily oil report. “Bottom line, North American and European consumers are going to be hard pressed this summer to pay the premium Wall Street is forcing” on them.
The Energy Information Administration said Wednesday that the nation’s oil supply grew last week to 355.9 million barrels and gas supplies rose to 3.6 million barrels. Both are above average for this time of year.
The report said motorists are burning more gasoline than last year, but demand hasn’t increased enough to cut into the huge surplus that built up during the recession.
Meanwhile, flights have resumed in London and Paris as the skies began to clear after a volcanic eruption in Iceland. Last week’s eruption, which halted air traffic in many European cities, appears to have made a sizable impact on the consumption of jet fuel.
U.S. energy consultancy Cameron Hanover said jet fuel demand has dropped by an estimated 42 percent to 700,000 barrels a day.
At the pump, retail gasoline prices fell for the third straight day this week to a new national average of $2.856 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.6 cents higher than a month ago and 79.6 cents more expensive than a year ago.
In other Nymex trading in May contracts, heating oil rose less than a penny to $2.1808 a gallon and gasoline dropped 1.19 cents to $2.269 a gallon. Natural gas added 4.2 cents to $4.017 per 1,000 cubic feet.
