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New York: Crude oil futures fell sharply yesterday after the US Energy Department said stockpiles of fuel and oil were larger than expected last week -evidence that the soaring price of gasoline has sliced into Americans' demand for fuel.
Light, sweet crude for August delivery fell $4.86 to $132.14 on the New York Mercantile Exchange (Nymex). In London, August Brent crude futures fell $3.93 to $132.53 a barrel on the ICE Futures exchange.
In its weekly inventory report, the department's Energy Information Administration said crude oil stocks rose slightly last week. Analysts surveyed by research firm Platts had expected a 1.7 million barrel decline.
Gasoline supplies fell less than expected. And inventories of distillates - which include diesel fuel and heating oil - rose much more than expected.
Demand for gas, meanwhile, fell 2.1 per cent.
"At some point, that's going to bring [gas] prices down," said analyst Phil Flynn, in Chicago.
The weekly inventory report tends to trigger volatile trading in oil futures, especially since prices have risen to record levels near $140.
Investors are monitoring the Federal Reserve decision on rates. If the Fed holds rates steady, and indicates that it may even raise rates in the future, energy investors may sell oil futures on the belief that the dollar will strengthen. On the other hand, Fed comments interpreted as less than hawkish on the dollar could pull buyers back into the oil market.
"Every penny we've picked up on this [inventory] report could be given back by the Federal Reserve," Flynn said.
Retail gas prices, meanwhile, slid 0.2 cent over-night to a US average of $4.067 a gallon, according to a survey of stations by AAA automobile club, the Oil Price Information Service and Wright Express.
Gas prices are $1.09 a gallon higher than a year ago, a dramatic increase that's pressuring US consumers also facing a downturn in the housing and job markets.
Diesel fuel, used to transport most food and consumer goods, is also near record levels.
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