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Oil prices decline as supply increases

Benchmark U.S. crude fell by 98 cents to $87.52 per barrel in afternoon trading in New York.

By CHRIS KAHN
The Associated Press

7/25/2012

NEW YORK  — The price of oil dropped Wednesday after the U.S. reported a surprise increase in supplies.

Benchmark U.S. crude fell by 98 cents to $87.52 per barrel in afternoon trading in New York while Brent crude lost 67 cents to $102.75 per barrel in London.

Prices fell after the Energy Information Administration reported that the United States' crude supply grew by 2.7 million barrels last week. Analysts were expecting supplies to fall by 250,000 barrels, according to a survey by Platts, the energy-information arm of McGraw Hill.

U.S. crude supplies have grown this year to the highest levels since 1990.

Gasoline supplies also rose more than expected. The EIA said that gasoline supplies increased by 4.1 million barrels last week. Analysts were expecting supplies to grow by only 750,000 barrels.

In other energy futures trading, heating oil lost 1.37 cents to $2.8107 per gallon while gasoline lost 7.23 cents to $2.7525 per gallon. Natural gas fell by 11 cents to $3.077 per 1,000 cubic feet.

Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

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