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Oil prices rise on hefty decline in U.S. stockpiles

Benchmark oil rose 27 cents to $97.11 per barrel Wednesday in New York.

By SANDY SHORE
The Associated Press

8/22/2012

The price of oil is rising after U.S. crude inventories dropped more than expected for a fourth consecutive week.

Benchmark oil rose 27 cents to $97.11 per barrel Wednesday in New York.

The government said crude inventories fell 5.4 million barrels to 360.7 million barrels last week. That's more than twice as much as the 2-million barrel decline predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. Stockpiles remain plentiful.

The decline isn't necessarily because of an uptick in demand. Production has been affected by some U.S. refinery and pipeline problems. And refineries are cutting production as they prepare to switch next month to processing winter blends of fuel.

Benchmark oil prices are up about $8 per barrel since Aug. 1. There concerns about supply disruptions from any regional conflict in the Middle East. And traders are hopeful that Europe, the U.S. and China will take more steps to promote growth in their respective countries. That, in turn, would improve demand for oil.

Yet, oil demand remains sluggish. The International Energy Agency earlier this month reduced its 2012 forecast for global crude demand to 89.6 million barrels a day from 89.9 million a day.

"The jury is way out on whether demand is, you know, truly improving," Jefferies Bache LLC energy analyst Andrew Lebow said.

At the pump, the national average for gasoline fell less than a penny overnight to $3.716 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's about a quarter more than a month ago and about 15 cents higher than a year ago.

In other trading, Brent crude, which is used to price international varieties of oil, rose 5 cents to $114.69 per barrel in London.

Other futures prices on the New York Mercantile Exchange:

— Heating oil was unchanged at $3.13 per gallon.

— Wholesale gasoline rose 2 cents to $3.08 per gallon.

— Natural gas increased 2 cents to $2.80 per gallon.

The Trucker staff can be reached for comment at editor@thetrucker.com.

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