Crude drops as government report shows supplies expand again; global demand forecast cut

Oil settles below $76 as supplies continue to grow

Oil prices fell Wednesday after the government reported that crude stocks increased again last week.

Benchmark crude lost 72 cents to settle at $75.65 a barrel on the New York Mercantile Exchange.

The Energy Information Administration said in its weekly report that oil supplies increased by 1.9 million barrels last week. Inventories have risen in 14 of the last 15 weeks. While it is typical for oil inventories to grow at this time of year, supplies are well above normal.

At the same time, the Paris-based International Energy Agency said in its monthly report that global oil demand this year was expected to rise less than previously thought. The IEA cut its forecast by 220,000 barrels to 86.4 million barrels a day. That is 1.62 million barrels a day higher than last year.

Oil has dropped sharply in the past week after hitting $87.15 a barrel on May 3. That was the highest level since October 2008.

Rising supplies and the European debt crisis have pushed oil prices down. The problems in Europe have driven the dollar up as the euro lost ground. Because oil is traded in dollars, the price of crude generally falls as the dollar gets stronger and oil becomes less attractive to buyers holding foreign currencies.

BP is still trying to put a containment device over the well that’s gushed millions of barrels of oil into the Gulf of Mexico since a drillship exploded and sank on April 20. The spill has not affected the price of oil, although there is concern that the it could eventually interfere with tankers carrying imported oil to Gulf ports and vessels moving refined products to other parts of the country.

Gas pump prices edged lower overnight, falling half a cent to a national average of $2.896 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices are 3.4 cents higher than a month ago and 64.8 cents above a year ago.

In other Nymex trading in June contracts, heating oil climbed 1.90 cents to settle at $2.1591 a gallon, and gasoline rose 1.52 cents to settle at $2.2104 a gallon. Natural gas gained 15.3 cents to settle at $4.284 per 1,000 cubic feet.

In London, Brent crude rose 71 cents to settle at $81.20 on the ICE futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.