Crude prices soared last week after the government reported that U.S. crude stockpiles fell by the largest amount in nearly a year. Even though the report could be explained by a sharp drop U.S. petroleum imports, the benchmark contract surged, touching new highs for three straight days until it hit $75 a barrel on Tuesday.
This week is expected to be a different story.
The American Petroleum Institute estimates that U.S. stockpiles grew by 4.3 million barrels for the week ended Aug. 21. The API estimate helped send crude prices lower in morning trading. However, analysts polled by Platts, the energy information arm of McGraw-Hill Cos., expect supplies to decline.
The uncertainty has led to some volatile prices this week, and prices tumbled 3 percent Tuesday.
"The momentum in the oil rally has certainly been broken. We are seeing a well-deserved correction right now and could see oil prices fall below $70 a barrel in the coming weeks," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Meanwhile, the Commerce Department said American manufacturers were rebounding as orders for durable goods jumped last month by the largest amount in two years. The government's Cash for Clunkers program boosted the auto industry as thousands of people traded in older vehicles for new cars.
At the pump, retail gas prices changed little overnight, falling a tenth of a penny lower to a new national average of $2.622 a gallon. A gallon of regular unleaded is 12.2 cents more expensive than it was a month ago, but it's $1.05 cheaper than last year.
In other Nymex trading, gasoline for September delivery fell 2.4 cents to $1.983 a gallon and heating oil fell 2.38 cents to $1.8321 a gallon. Natural gas edged down by 2.1 cents to $2.861 per 1,000 cubic feet.
Associated Press Writers Carlo Piovano in London and Eileen Ng in Kuala Lumpur contributed to this report.
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