Oil Falls on Surging Gasoline Inventories
Energy prices fell Wednesday after the government reported that unused gasoline in storage grew for the third-straight week, another signal that consumer demand for energy is waning.
Benchmark crude for August delivery lost 57 cents to settle at $68.67 a barrel on the New York Mercantile Exchange. In London, Brent prices fell 47 cents to settle at $68.33 a barrel on the ICE Futures exchange.
At the pump, retail gas prices continued to decline this week after peaking Sunday at $2.693 a gallon. The national average for a gallon of gas shed another 0.7 cents overnight to $2.676 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.
Even though pump prices have risen more than a quarter over the past month, prices at this time last year were above $4 per gallon.
That still hasn’t brought more people out for road trips this year. AAA said Wednesday that fewer people will be traveling during the Fourth of July weekend, which is typically the busiest time of the year on America’s highways.
A study by the auto club estimated that the number of people traveling during that weekend will fall 1.9 percent from last year, with about 37.1 million people traveling at least 50 miles from home.
Layoffs and fears about the economy as a whole have trumped cheap gas, and refiners have been cutting back on production this year to match weak demand.
Supply and demand numbers this year have taken a back seat to the dollar, however.
Fed, which said in March it would spend $1.2 trillion to revive lending, has sent investors flocking to oil and other commodities in search of a hedge against inflation. But on Wednesday, the Fed said that inflation will remain “subdued for some time.”
After the announcement, the euro moved slightly lower at $1.3919 from $1.4083.
The Energy Department’s Energy Information Administration reported Wednesday that U.S. oil supplies dropped more than expected last week, falling 1.1 percent. Still, gasoline in storage swelled more than expected to 208.9 million barrels.
The government also reported that orders for big-ticket manufactured goods rose sharply in May, and orders for non-defense capital goods posted the biggest increase since September 2004.
In other Nymex trading, gasoline for July delivery fell 5.07 cents to settle at $1.8425 a gallon and heating oil dropped 3.09 cents to settle at $1.7381. Natural gas for July delivery lost 11.8 cents to settle at $3.761 per 1,000 cubic feet.
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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
6/24/2009 3:24 PM CHRIS KAHN AP Energy Writer NEW YORK