Oil falls to near $74 in Europe on stronger dollar, growing US supplies suggest weak demand

Oil falls to near $74 as US crude supplies grow

Oil prices fell to near $74 a barrel on Thursday as the dollar strengthened and rising crude inventories in the U.S. suggest demand remains weak.

By early afternoon in Europe, benchmark crude for November delivery was down 55 cents to $74.16 a barrel in electronic trading on the New York Mercantile Exchange. The contract had lost 26 cents to settle at $74.71 on Wednesday.

The Energy Department’s Energy Information Administration said Wednesday that crude inventories increased by 1 million barrels for the week ending Sept. 17. Analysts had expected a drop of 1.5 million barrels, according to Platts, the energy information arm of McGraw-Hill.

Inventories of gasoline and distillates also rose, the administration said.

“Gasoline demand especially remains a concern for the market, as it is only slightly up on last year’s low level, at 8.8 million barrels a day,” said a report from Commerzbank in Frankfurt. “The slower pace of the U.S. economy in the second half of the year makes a marked recovery of (gasoline demand), by far most important demand component in the U.S., less likely.”

A stronger dollar also helped push down crude prices by making the commodity more expensive for investors holding other currencies.

The euro fell to $1.3335 on Thursday from $1.3390 late Wednesday in New York.

Oil has seesawed around the $75 level for most of the past year despite strong crude demand in emerging economies, such as China, as growing oil supplies in the U.S. weigh on prices.

Combined inventories of crude, gasoline and distillates grew last week to 165 million barrels more than two years ago, Cameron Hanover said. Just three weeks before, the supply was 132 million barrels over two years ago.

“We continue to increase the amount of oil we have in storage against the amount held two years ago,” Cameron Hanover said. “We still have way too much oil, and demand is not trending higher in any meaningful way.”

In other Nymex trading in October contracts, heating oil fell 0.65 cent to $2.1134 a gallon and gasoline lost 0.51 cent to $1.9145 a gallon. Natural gas gained 2.7 cents to $3.946 per 1,000 cubic feet.

In London, Brent crude fell 29 cents to $77.66 a barrel on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.