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Oil falls to near $106 in Europe as US crude supply jump suggests demand remains weak
LONDON (AP) ' Oil prices fell to near $106 a barrel Wednesday in Europe after a report showed a jump in U.S. crude supplies, a sign demand remains sluggish.
Benchmark oil for April delivery was down 47 cents to $106.24 by early afternoon in Europe in electronic trading on the New York Mercantile Exchange. The contract rose 37 cents to settle at $106.71 per barrel in New York on Tuesday.
Brent crude was down 45 cents at $125.7 per barrel in London.
The American Petroleum Institute said late Tuesday that crude inventories rose 2.8 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels.
Inventories of gasoline fell 2.1 million barrels last week while distillates tumbled 3.5 million barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.
Crude has surged from $75 in October as evidence of a strengthening U.S. economy during recent months has eased fears of a recession. The government said Tuesday that retail sales rose 1.1 percent, the biggest jump since September.
"The worst fears of the last three months of 2011 have not materialized," Singapore central bank managing director Ravi Menon said in a speech Wednesday. "The last six weeks in particular have shown signs that the global economy has avoided imminent disaster."
However, "a sharp spike in oil prices could potentially derail global economic growth," he said.
Policymakers and analysts are worried higher fuel costs will undermine consumer spending and quicken inflation.
In other energy trading, heating oil was up 4.8 cents at $3.27 per gallon and gasoline futures rose 0.9 cents at $3.36 per gallon. Natural gas slid 4.5 cents to $2.25 per 1,000 cubic feet.