A stronger dollar and higher interest rates in China kept a lid on the price of oil Wednesday.
Benchmark West Texas Intermediate crude for August delivery lost 24 cents to settle at $96.65 per barrel Wednesday on the New York Mercantile Exchange. Brent crude, used to price many international oil varieties, added a penny to settle at $113.62 per barrel on the ICE Futures exchange in London.
Crude had been rising since last week, nearly recovering from a late-June drop to around $90 a barrel following the announcement that the U.S. and other countries would release 60 million barrels of crude into world markets. Some investment banks said prices would head higher anyway as world supplies tightened later this year. By Wednesday investors were again focused on short-term concerns about the global economy.
MasterCard SpendingPulse said that U.S. motorists bought less gasoline last week for the 15th week in a row, compared to last year. Its weekly survey, which is based on credit card purchases at thousands of retail gas stations around the country, said that motorists bought 0.5 percent less gasoline last week.
The dollar rose as the euro sank after Portugal's bonds were downgraded to junk status. Credit ratings agency Moody's said Portugal, like Greece, will probably need more international financial aid to deal with its debt problems. Oil is priced in U.S. currency, and it tends to fall as crude becomes more expensive for investors holding foreign money.
China raised a key interest rate for the third time this year on Wednesday in an effort to control inflation. China's inflation rate hit a 34-month high in May. Higher interest rates could slow economic growth there and demand for oil.
A new report in the U.S. showed sluggish economic growth in the service sector. The Institute for Supply Management, which measures activity for a range of industries including retail, health care, financial services and construction, said the service sector continued to expand, albeit slowly, for the 19th straight month in June.
"We're marking time with oil," independent oil analyst Jim Ritterbusch said. The slew of weak economic reports has made many investors cautious, he said, and many are waiting for fresh supply and demand data due out later this week from the American Petroleum Institute and the Energy Information Administration.
Meanwhile gasoline prices rose slightly to an average $3.569 per gallon on Wednesday, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped 41.6 cents from three-year highs set earlier this year, but it's still 84.5 cents higher than the same time last year.
In other Nymex trading for August contracts, heating oil gained less than a penny to settle at $2.9633 per gallon and gasoline futures rose 2.02 cents to settle at $2.9976 per gallon. Natural gas lost 14.9 cents to settle at $4.222 per 1,000 cubic feet.