Oil Prices Fall After Unexpected Supply Increase

By Salon Staff

Published January 5, 2012 4:36PM (EST)

NEW YORK (AP) — Oil prices are sliding after the government reported an unexpected increase in oil supplies and a 7 percent drop in petroleum demand.

Benchmark crude on Thursday fell 49 cents at $102.73 per barrel in New York. Brent crude fell 94 cents to $112.76 per barrel in London.

The Energy Information Administration said that oil supplies grew by 2.2 million barrels last week. Analysts expected them to shrink by 450,000 barrels.

The surprise increase comes as American drivers continue to cut back on gasoline purchases. U.S. gasoline demand has dropped for several months as retail prices rose. Pump prices rose about 3 cents on Thursday to a national average of $3.32 per gallon, the highest ever for this time of year.

Salon Staff

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