Oil slips as growing supply glut cited

Associated Press / July 23, 2009

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NEW YORK - Oil prices dipped yesterday after a government report showed US fuel supplies are growing, with American consumers buying less gas even at a huge discounts to last year.

Benchmark crude for September delivery dropped 21 cents to settle at $65.40 a barrel on the New York Mercantile Exchange after falling as low as $63.76. In London, Brent prices added 34 cents to settle at $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 that showed bulging supplies of motor gasoline and distillate fuel.

The report said the country has 215.4 million barrels of motor gasoline in storage, about 3 percent more than last year. And that was when $4 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 consumers have cut back on energy consumption this year.