BUSINESS
04/18/2012 04:07 EDT | Updated 06/18/2012 05:12 EDT

Rising US oil supply and weak demand push oil prices below US$103 per barrel

NEW YORK, N.Y. - Oil prices dropped Wednesday after the government said U.S. supplies grew more than expected last week.

Benchmark West Texas Intermediate crude fell US$1.53 to finish at $102.67 per barrel in New York, while Brent crude lost 81 cents to end at $117.97 per barrel in London.

The Energy Information Administration reported that U.S. crude oil supplies grew by 3.9 million barrels last week. Analysts expected an increase of 400,000 barrels. The U.S. government's weekly report also said that U.S. oil demand dropped 2.7 per cent, gasoline demand fell 2.8 per cent, compared with a year ago.

The data suggest that motorists aren't filling up as much ahead of the summer driving season.

"You continue to see some pretty anaemic fuel demand levels" in the U.S., said Gene McGillian, a broker and oil analyst at Tradition Energy.

U.S. retail gasoline prices dipped slightly to a national average of $3.899 per gallon, according to AAA, Wright Express and Oil Price Information Service. The national average has declined by 2.6 cents this month, and it's now it's just barely under $3.90 for the first time since March.

Experts say that gasoline prices have levelled off this month, but they're likely to rise to around $4 per gallon during the next few weeks as more refiners switch to producing summer blends of fuel.

In Canada, the price at the pump averaged C$1.341 per litre, up from $1.284 a month ago, according to GasBuddy.com.

In other energy trading, heating oil gave up less than a penny to finish at US$3.1182 per gallon and gasoline futures lost 3.13 cents to end at $3.2027 per gallon. Natural gas futures were unchanged at $1.9510 per 1,000 cubic feet.

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

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