Oil falls near $82 after US gasoline supply drop

AP News
Posted: Oct 21, 2010 5:38 AM
Oil falls near $82 after US gasoline supply drop

Oil prices fell to near $82 a barrel Thursday in Asia after an unexpected increase in U.S. gasoline supplies suggested crude demand remains sluggish.

Benchmark oil for December delivery was down 39 cents to $82.15 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.38 to settle at $82.54 on Wednesday.

The Energy Department's Energy Information Administration said Wednesday that commercial crude inventories rose less than analysts expected, adding 700,000 barrels. But a surprise 1.2 million barrel jump in gasoline supplies dismayed traders.

"Demand is getting worse," Cameron Hanover said. "Lower demand is also telling another element of the story of weakness in the U.S. economy."

Crude prices Thursday broke out of a correlation with the U.S. dollar. For most of the past year, oil would rise when the U.S. currency fell since that makes dollar-based commodities more expensive for investors with other currencies.

But Thursday the dollar fell and crude prices also fell. The euro rose to $1.4044 from $1.3951 on Wednesday and the dollar slid to 81.04 yen from 81.12 yen.

In other Nymex trading in November contracts, heating oil fell 0.72 cent to $2.248 a gallon and gasoline dropped 0.48 cent to $2.077 a gallon. Natural gas was steady at $3.530 per 1,000 cubic feet.

In London, Brent crude rose 3 cents to $83.63 a barrel on the ICE Futures exchange.