Oil drops one per cent on big increase in supplies of gasoline, diesel fuel

NEW YORK, N.Y. - The price of oil fell one per cent Wednesday after the U.S. government reported a large buildup in supplies of gasoline and distillate fuels such as diesel.

Benchmark West Texas Intermediate crude for January delivery dropped $1.07 to close at US$97.44 on the New York Mercantile Exchange. Oil had jumped $1.17 to US$98.51 on Tuesday, its highest level in six weeks.

Gasoline supplies rose by 6.7 million barrels, the Energy Department said, while distillate supplies increased by 4.5 million barrels in the week ended Dec. 6. Both increases were more than three times what analysts were expecting, raising the possibility that refiners would slow production and purchases of oil in the coming weeks.

The fuel increases overshadowed a huge decline in oil supplies of 10.6 million barrels.

Oil has fallen from $110 in September on high supplies, muted demand and a lessening of Middle East tensions. It sank to nearly $92 late last month but has since crept higher as the U.S. and Chinese economies show signs of sustained recovery.

Brent crude, a benchmark for international crude, rose 32 cents to US$109.70 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex, wholesale gasoline dropped two cents to US$2.66 a U.S. gallon (3.79 litres), heating oil was flat at US$3.02 a gallon and natural gas rose 10 cents to US$4.34 per 1,000 cubic feet.

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