Oil falls below $94 after mixed US supply report

AP News
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Posted: Jun 22, 2011 7:47 AM
Oil falls below $94 after mixed US supply report

Oil prices fell below $94 a barrel Wednesday after a crude supply report reflected mixed signs about U.S. demand and the dollar strengthened against other currencies.

By early afternoon in Europe, benchmark oil for August delivery was down 82 cents to $93.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to settle at $94.17 on Tuesday.

In London, Brent crude for August delivery was down 41 cents to $110.54 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories fell 81,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.0 million barrels.

Inventories of gasoline dropped 1.5 million barrels last week, surprising analysts who had forecast an increase of 1 million barrels. Distillates fell 541,000 barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data _ the market benchmark _ later Wednesday.

"Demand figures have not been strong and we still have more crude oil in storage than in previous years," energy consultant Cameron Hanover said in a report.

A stronger dollar also weighed on prices by making commodities like oil more expensive for investors holding other currencies. A stronger dollar usually pushes down crude prices.

The euro slipped to $1.4366 from $1.4416 in late trading in New York, while the dollar strengthened to 80.23 yen from 80.13 yen.

"Markets are ... slightly weaker as they wait for the vote on the Greek austerity package, but likely ready to rally if and when it passes," said Edward Meir at MF Global in New York. "However, the bounce will be brief, as there are still serious problems remaining in Europe. For one thing, other countries are experiencing severe debt issues."

In other Nymex trading in July contracts, heating oil fell 1.75 cents to $2.8725 a gallon while gasoline lost 0.01 cent to $2.8825 a gallon. Natural gas futures fell 1.6 cents to $4.372 per 1,000 cubic feet.

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Alex Kennedy in Singapore contributed to this report.