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Oil prices drop as government report shows big increase in US supplies
NEW YORK (AP) ' Oil fell after the government reported a bigger than expected increase in supplies in the U.S.
The Energy Department said inventories of crude oil rose by 4.2 million barrels last week. Analysts were expecting an increase of just 1 million barrels. The report indicated that demand for oil in the U.S. remains weak.
West Texas Intermediate, which is used to price oil produced in the U.S., fell 61 cents to $105.95 per barrel. The price declined both Monday and Tuesday after reaching a nine-month high last week.
Brent crude, which is used to price international oil, gained 20 cents to $121.75 in London.
Oil was higher earlier, after the U.S. government said the economy expanded at a 3-percent annual rate in the fourth quarter. That's up from a prior estimate of growth of 2.8 percent. Americans also earned more income in the final three months of 2011 than previously reported.
But economists cautioned that growth is likely slowing in the current quarter as companies spend less on restocking their warehouses.
Retail gasoline prices rose for the 22nd consecutive day to a national average of $3.73 per gallon.
The Energy Department said gasoline supplies shrank by 1.6 million barrels, or 0.7 percent, to 229.9 million barrels. That's 2 percent less than year-ago levels. Analysts expected gasoline supplies to decrease by 180,000 barrels.
Demand for gasoline over the four weeks ended Feb. 24 was 6.7 percent lower than a year earlier, averaging 8.3 million barrels a day.