Oil dips on signs of growing supply glut

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

Benchmark crude for September delivery dropped 4 cents to $65.57 a barrel on the New York Mercantile Exchange after falling as low as $63.76. In London, Brent prices rose 32 cents to $67.19 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 Wednesday, traders focused on a report by the Energy Information Administration's 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.

Retail sales for gasoline are falling, even though a gallon costs 36 percent less than last year.

At the pump, retail gas prices added less than a penny overnight to a new national average of $2.461 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That's about 23 cents cheaper than a month ago, when gas prices peaked for the year.

In other Nymex trading, gasoline futures for August delivery rose 1.8 cents to $1.8299 a gallon and heating oil rose 1.86 cents to $1.7170. Natural gas for August delivery added 17 cents to fetch $4.017 per 1,000 cubic feet.

Associated Press writers George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.