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Wednesday, Jun 20, 2012 3:45 PM UTC

Oil prices fall as US supplies grow

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Topics: From the Wires,

NEW YORK (AP) — The price of oil dropped Wednesday after the government said U.S. supplies unexpectedly grew last week.

Benchmark U.S. crude fell by $1.63 to $82.40 per barrel in New York. Brent crude, which is used to price much of the oil imported into the U.S., lost $1.12 to $94.64 per barrel in London.

The Energy Information Administration reported that oil supplies grew by 2.9 million barrels last week. Analysts were predicting that supplies would fall by 600,000 barrels. Oil supplies have risen this year to the highest levels since 1990, thanks to a boom in North American production.

“The U.S. is flush with oil right now,” independent analyst and trader Stephen Schork said. “And if you factor in the economic mess in Europe, slower economic growth in China, and probably overproduction from the Saudis in preparation for the Iranian oil embargo, the world has a comfortable supply” of oil.

Schork and other analysts are expecting oil prices to fluctuate greatly in the afternoon when the Federal Reserve announces whether it will take action to stimulate the economy.

At the pump, U.S. gasoline prices fell by a penny to a national average of $3.487 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is nearly 45 cents cheaper than it was in April, when prices peaked for the year.

In other futures trading, heating oil lost 1.6 cents to $2.6191 per gallon while wholesale gasoline lost 2.02 cents to $2.6213 per gallon. Natural gas lost 1.1 cents to $2.534 per 1,000 cubic feet.

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Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

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