Crude oil price drops to $90.62 per barrel

Gasoline prices remained steady as oil prices dropped.

NEW YORK (AP) — Oil’s rise to $100 a barrel, which seemed a done deal as recently as two days ago, was dealt a severe blow Wednesday when the government reported an increase in supplies at the Nymex delivery terminal in Cushing, Okla., which is closely watched by traders as a benchmark of oil inventory tightness.

Anemic growth in demand and a jump in refinery activity also weighed on prices, which have dropped sharply in recent days on concerns about the economy and expectations supplies will grow.

“The report ... added to the bearish sentiment in the market,” said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. “It comes at a period in time when OPEC is boosting production ... and considering another increase in production.”

Light, sweet crude for January delivery plunged $3.80 to settle at $90.62 a barrel on the New York Mercantile Exchange after Tuesday’s drop of $3.28 a barrel.

That was crude’s second-largest two-day price decline since the Nymex introduced a futures contract in 1983. On Oct. 19 and 22, 1990, crude prices dropped $8.42.

The latest price is $8.67, or 8.7 percent, below the record price of $99.29 set last week.

Though analysts caution that futures could still rebound and again threaten to reach $100 this year, most feel that’s becoming less likely. Many market observers have long argued that prices were driven higher by speculators and have predicted that futures would fall sharply at some point.

At the pump, meanwhile, gas prices rose 0.5 cent overnight to a national average of $3.096 a gallon, according to AAA and the Oil Price Information Service. It was the second increase in as many days, though prices remain 1.6 cents below their most recent peak.

Analysts say gas prices are likely to remain flat or even fall unless oil rises to $100 or higher. Gas prices hit an all-time record of $3.227 a gallon in May.

Demand for gasoline continues to rise, but at a slow pace, analysts say. Gasoline demand rose last week by 134,000 barrels, and is up 0.4 percent over the last four weeks compared with the same period last year, the Energy Department’s Energy Information Administration said in its weekly inventory report. That’s well below the historic average year-over-year growth rate of 1.5 percent, analysts say.

“There’s just more and more evidence every week that we’re already seeing ... demand deterioration due to high prices,” said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Ill.

Overall demand for petroleum products fell 487,000 barrels last week.

As demand for gasoline is slowing, supplies are rising. Gasoline inventories last week jumped 1.4 million barrels, more than double the 600,000 barrel increase analysts surveyed by Dow Jones Newswires had expected. That increase came despite a 289,000 barrel decline in gasoline imports to an average of 835,000 barrels a day.

December gasoline futures dropped 9.73 cents to settle at $2.2757 a gallon on the Nymex on Wednesday.