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Oil drops for 3rd straight day

OIL prices fell yesterday as Wall Street stumbled for a third straight day and the dollar strengthened - making crude contracts tougher to buy with foreign currency.

Benchmark crude for March delivery lost US$1.54 to settle at US$74.54 a barrel on the New York Mercantile Exchange. In London, Brent crude for March delivery fell US$1.75 to settle at US$72.83 a barrel on the ICE Futures exchange.

Crude prices have tumbled this month, pulling down gasoline prices with them as weekly government reports showed the US hasn't regained its appetite for petroleum. The economy may be slowly recovering, but Americans aren't burning more fuel than they did last year.

Meanwhile, the Energy Information Administration said Thursday that the nation's gasoline supply ballooned by 3.9 million barrels last week as demand fell for the fourth straight week.

US refineries, which have struggled to pass along the higher crude costs to motorists, have responded by drastically slowing down operations. Last week they cut refining to the lowest levels on record, excluding periods when hurricanes forced refineries to shut down in the Gulf of Mexico, according to analyst Stephen Schork.

The dollar extended its recent gains against the euro and the pound as possible changes in US financial regulations, tightening of monetary policy in China and credit turmoil in Greece drove investors to the perceived safety of the US currency. And the Dow Jones Industrial Average was down more than 160 points in late afternoon trading, after sinking 335 points in the previous two sessions.

In other Nymex trading in February contracts, heating oil fell 4.4 cents to settle at US$1.9416 a gallon, while gasoline lost 1.72 cents to settle at US$1.9657 a gallon. Natural gas futures added 20.4 cents to settle at US$5.819 per 1,000 cubic feet.


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