Crude oil futures went up due to an increase in supplies at the Nymex delivery terminal in Cushing, Oklahoma, which is closely watched by traders as a benchmark of oil inventory tightness.
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Anemic growth in demand and a jump in refinery activity also weighed on prices, which have dropped sharply in recent days on concerns about the economy and expectations supplies will grow.
"The report ... added to the bearish sentiment in the market," said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. "It comes at a period in time when OPEC is boosting production ... and considering another increase in production."
Light, sweet crude for January delivery plunged $2.64 to $91.78 a barrel on the New York Mercantile Exchange. Oil futures fell more than $3 a barrel on Tuesday, and are more than $7 below the record price of $99.29 set last week.
Several Organization of Petroleum Exporting Countries officials in recent days have said the cartel is willing to boost output to bring prices down.
Demand for gasoline continues to rise, but at an anemic rate, analysts say. Gasoline demand rose last week by 134,000 barrels, and is up 0.4 percent over the last four weeks compared to the same period last year, the Energy Department's Energy Information Administration said in its weekly inventory report. That's well below the historic average year-over-year growth rate of 1.5 percent, analysts say.
"There's just more and more evidence every week that we're already seeing ... demand deterioration due to high prices," said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Illinois.
Overall demand for petroleum products fell by 487,000 barrels last week.
As demand for gasoline is slowing, supplies are rising. Gasoline inventories jumped last week by 1.4 million barrels, more than double the 600,000 barrel increase analysts surveyed by Dow Jones Newswires had on average expected. That increase came despite a 289,000 barrel decline in gasoline imports to an average of 835,000 barrels a day.
December gasoline futures dropped 6.52 cents to $2.3078 a gallon on the Nymex Wednesday.
Overall crude supplies fell during the week ended Nov. 23 by 400,000 barrels, in line with the 500,000 barrel decrease analysts had expected. But that decline was overshadowed by a 600,000 barrel increase in Cushing crude inventories. Cushing inventories are up 13.4 percent in two weeks.
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