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Oil dips on signs of growing supply glut

OIL prices dipped yesterday after a government report showed U.S. fuel supplies are growing, with American consumers buying less gasoline even at a huge discounts to last year.

Benchmark crude for September delivery dropped 21 cents to settle at US$65.40 a barrel on the New York Mercantile Exchange after falling as low as US$63.76. In London, Brent prices added 34 cents to settle at US$67.21 a barrel on the ICE Futures exchange.

Energy prices got a boost this past week as Federal Reserve Chairman Ben Bernanke said the economy was improving and companies reported strong second-quarter earnings.

But yesterday, traders focused on a report by the Energy Information Administration's that showed bulging supplies of motor gasoline and distillate fuel.

The report said the U.S. has 215.4 million barrels of motor gasoline in storage, about 3 percent more than last year. And that was when US$4-a-gallon gasoline had more people leaving cars parked in the driveway. Distillates, which include heating oil, are rising to their highest level since the mid-1980s.

Both illustrate how much U.S. consumers have cut back on energy consumption this year.

Retail sales for gasoline are falling, even though a gallon (3.8 liters) costs 36 percent less than last year.

In other Nymex trading, gasoline futures for August delivery rose 2.63 cents to settle at US$1.8383 a gallon and heating oil rose 1.28 cents to settle at US$1.7112 per gallon. Natural gas for August delivery added 8.8 cents to settle at US$3.793 per 1,000 cubic feet.


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