The price of oil fell sharply Wednesday as supplies in the U.S. reached the highest level since July 1990.
Benchmark oil for May delivery was down $1.77, or nearly 2 percent, to $95.42 a barrel in midday trading on the New York Mercantile Exchange.
The Energy Department said crude oil supplies grew by 2.7 million barrels, or 0.7 percent, to 388.6 million barrels in the week ended March 29. The nation's supply of oil is now 7.2 percent above year-ago levels and the highest since July 27, 1990, when it was at 391.9 million barrels.
Oil production in the U.S. is about 7.1 million barrels a day, up 22 percent from a year-earlier and the highest in two decades. Meanwhile refineries are slowly ramping up production after undergoing maintenance in preparation for the switch to summer blends of gasoline. They operated at about 86 percent of capacity last week.
In addition, demand for gasoline over the four weeks ended March 29 was down 1.2 percent from a year ago, averaging about 8.5 million barrels a day. Cold weather last month may have kept some people off the road. Gasoline supplies fell by 600,000 barrels last week, but analysts were expecting a decline twice that size. Gasoline futures tumbled 8 cents, or 2.6 percent, to $2.96 a gallon in New York.
Those who are on the highway are paying an average of $3.64 for a gallon of gas, according to AAA. That's down 11 cents from a month ago and 29 cents lower than at this time last year.
Brent crude, used to price many kinds of oil imported by U.S. refineries, was down $2.38, or 2.2 percent, to $108.31 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
- Heating oil lost 6 cents to $3.03 a gallon.
- Natural gas retreated 3 cents to $3.94 per 1,000 cubic feet.