Oil prices decline after jump in crude inventories

By MADLEN READ – 2 hours ago

NEW YORK (AP) — The price of oil dipped back to the $113-a-barrel level Wednesday after the government reported a massive increase in the nation's crude supplies amid a slowdown in fuel demand.

The Energy Information Administration, an arm of the U.S. Energy Department, said crude inventories rose by a hefty 9.4 million barrels in the week ended Aug. 15, after a big gain in imports. The figure came in much higher than the average analyst forecast for a 1.7 million-barrel increase, according to energy information provider Platts.

U.S. fuel supplies are not abundant across the board — gasoline inventories shrank by a larger-than-expected 6.2 million barrels to below-average levels, the EIA said. However, the decrease was not a major concern on Wednesday to traders, who have been focusing on weakening demand in the United States. Gasoline demand averaged about 9.5 million barrels per day over the last four weeks, or 1.6 percent lower than the same period last year, the EIA said.

Light, sweet crude for September delivery fell $1.43 to $113.10 a barrel in midday trading on the New York Mercantile Exchange, after rising above $116 a barrel in earlier trading. The September contract expires on Wednesday.

The dollar rose against most currencies on Wednesday, giving traders an extra reason to exit commodities.

Few market watchers, however, were discounting the possibility of nervousness returning to the oil markets and bumping prices up again.

Oil prices decline after jump in crude inventories....