Oil prices fell below $118 a barrel Wednesday after the U.S. government reported larger-than-expected increases in stockpiles of crude oil and distillates, suggesting that high energy prices are hurting demand. Light sweet crude for September delivery fell more than $1.50 to near $117.50 a barrel in late-morning trade on the New York Mercantile Exchange. Earlier, prices fell to near $117, the lowest level since May 2. Oil prices currently are down about $30 from their record high above $147 hit on July 11. The U.S. Energy Information Administration (EIA) said in its weekly petroleum inventory report that crude supplies rose by 1.7 million barrels to 296.9 million barrels, more than the 1.2 million-barrel increase expected by analysts. Stockpiles of distillates—including diesel, heating oil, and jet fuel—rose 2.8 million barrels to 133.3 million barrels, higher than the 2.3 million-barrel increase analysts had expected, the EIA said. However, gasoline inventories fell by 4.4 million barrels to 209.2 million barrels, much more than the 1.4 million-barrel decline analysts expected. The big drop in gasoline supplies surprised some oil-market traders, but analysts said it likely signals that gasoline distributors have taken more deliveries from the refiners as the summer driving season enters its last month—not that U.S. drivers are suddenly increasing their driving. The EIA said gasoline demand in July reached about 9.4 million barrels per day, which was 2.3 percent lower than the same period a year ago.
