Oil prices dropped Wednesday after the government reported that crude supplies unexpectedly grew last week and remain well above typical levels, the Associated Press reports.
Benchmark crude for August delivery fell $2.09 to $75.76 on the New York Mercantile Exchange. The contract gained 76 cents to settle at $77.85 on Tuesday.
Retail gasoline prices climbed as well, rising 0.9 cent to a national average of $2.741 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 4.1 cents in the past week. They are 5.2 cents below month-ago levels and 5.2 cents higher than a year ago.
The Energy Information Administration said Wednesday that crude oil supplies increased by 2 million barrels last week. Analysts were looking for stockpiles to drop.
Oil prices also were undercut by a judge’s ruling that lifted the government’s six-month ban on deepwater drilling in the Gulf of Mexico. Washington is appealing the ruling. If it stands, more supplies of crude may become available, which would soften prices.
Furthering dampening prices was the government’s report that new home sales sank to the lowest level on record in May, indicating the economic recovery is still in low gear.
“That means oil demand is going to be poor,” PFGBest analyst Phil Flynn said.
Foreign-exchange factors also figured in the oil price picture. The euro fell against the dollar Wednesday. Since oil and other commodities are priced in oil, they become less attractive to holders of foreign currency as the dollar gets stronger.
Crude has hovered above $77 a barrel this week as traders assess whether global oil demand is strong enough to justify extending a rally from $64 a barrel that started on May 25.
In other Nymex trading, heating oil fell 4.99 cents to $2.0630 a gallon, gasoline dropped 5.84 cents to $2.0751 a gallon and natural gas gained 5.4 cents at $4.810 per 1,000 cubic feet.
in London Brent crude was down $1.94 at $76.10 a barrel on the ICE futures exchange.
