04/10/2013 04:09 EDT | Updated 06/10/2013 05:12 EDT

Oil holds steady as gasoline futures plunge as US supplies increase; natural gas soars

Oil ended little changed Wednesday while gasoline futures plunged after a report showed that demand for fuel in the U.S. remains relatively weak.

Benchmark West Texas Intermediate crude for May delivery finished up 44 cents at $94.64 a barrel in New York. Wholesale gasoline prices dropped eight cents, or 2.6 per cent, to end at US$2.87 a U.S. gallon (3.79 litres).

Crude oil supplies grew by 300,000 barrels, or 0.1 per cent, in the week ended April 5, according to the Energy Information Administration, the Energy Department's statistical arm. At 388.9 million barrels, the U.S. oil supply is the highest since July 1990. Analysts had expected a bigger increase of 1.4 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.

But the figures on other fuels illustrate how U.S. demand remains subdued. Gasoline supplies expanded by 1.7 million barrels, while analysts had expected supplies to shrink by 1.8 million barrels. Demand for gasoline fell 2.4 per cent in the four weeks ended April 5, the EIA said.

On Tuesday the EIA predicted that gasoline consumption would drop by 20,000 barrels a day from April through September, compared with last year, as any increase in travel is offset by greater fuel efficiency in the U.S. auto fleet.

Supplies of distillates, which include diesel and heating oil, decreased by 200,000 barrels to 112.8 million barrels. Analysts had expected a much bigger decline of 1.8 million barrels. Still, heating oil futures dropped a penny to finish at US$2.95 a gallon, likely getting some support from forecasts of a cold spell in parts of the U.S. next week.

Those weather forecasts drove a gain in natural gas prices, which rose seven cents to end at US$4.09 per 1,000 cubic feet. Natural gas has risen 24 per cent this year, boosted by a cold end to winter.

Brent crude, which sets the price of oil used by many U.S. refineries to make gasoline, fell 37 cents to finish at US$105.78 a barrel on the ICE Futures exchange in London.