Oil prices climbed above $70 a barrel Wednesday with the government reporting that crude supplies dropped for the seventh time in eight weeks.
Benchmark crude for August delivery added 55 cents to $70.44 a barrel on the New York Mercantile Exchange. In London, Brent prices rose $1.21 to $70.51 a barrel on the ICE Futures exchange.
The Energy Department’s Energy Information Administration said in its weekly report that the massive surplus of oil in the United States continued to shrink last week. Crude supplies fell more than some expected, losing 3.7 million barrels for the week ended June 26.
Falling supplies are part of the reason energy prices have been rising for months, but that doesn’t necessarily mean more people and businesses are using a lot more energy. The U.S. is importing less petroleum than it did last year.
“There are some people, like me, who think ‘So, what if there’s less oil? There’s still plenty out there,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
Kloza said petroleum markets will continue to get a boost in demand during America’s summer driving season, but by September, American consumption will begin falling again.
Already, retail gasoline prices have slipped from their peak of $2.693 a gallon on Father’s Day, and have fallen every day since then. Pump prices lost another 0.3 cents overnight to a new national average of $2.63 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.
A gallon of regular gas is 11.8 cents more expensive than last month, but it’s $1.457 cheaper than a year ago.
Oil prices also should struggle to rise from their current level in the next three months as Americans drive billions fewer miles and manufacturers other major industries cut back on their operations, analysts at Bank of America Merrill Lynch said a report Wednesday.
“The fundamentals in crude oil market look fragile,” Bank of America Merrill Lynch said. “Anyway you cut it, demand is extremely weak.”
Oil had been on an extended rally as investors worried about the weakening dollar poured money into commodities. Oil rose 41 percent in the second quarter.
In other Nymex trading, gasoline and heating oil for August delivery both fell less than a penny to $1.8972 a gallon and 1.7808 a gallon, respectively. Natural gas for August delivery lost 1.9 cents to $3.816 per 1,000 cubic feet.
Copyright 2009 The Associated Press.