Retail gasoline prices have ticked upward since the middle of the month, around the same time that crude futures rose above $75 per barrel for the first time this year.
The rising cost of crude and ensuing production cuts by refiners who are also stung by those prices has helped push gasoline prices higher for 15 days in a row.
The report by the Energy Information Administration Wednesday seemed to wash away fears of tightening supply, at least for now.
Gasoline supplies rose by nearly 2 million barrels though many energy analysts had expected supplies to fall for a third week in a row.
Gasoline futures on the New York Mercantile Exchange fell 4 percent, though the prices that people see at the pump rose slightly overnight, as they have done for two weeks.
Since Oct. 13, prices have risen more than 20 cents and could set a new high for the year as early as Thursday. Gas prices reached as high as $2.6925 on June 21.
Refiners are buying less crude to make fuel because demand from airlines, trucking companies and consumers remains relatively week.
Unable to pass off cost increases for the crude they must buy, refiners have shut down operations and production is currently at levels more common in the aftermath of a hurricane.
At the root of the price increase for crude is the weak dollar.
When the dollar falls, investors holding euros or other relatively strong currencies can buy more crude because it's bought and sold in dollars.
The dollar gained strength on Wednesday, and crude prices fell even before the gasoline supply report sent prices down sharply.
Benchmark crude for December delivery fell $2.09, more than 2 percent, to settle at $77.46 a barrel on the New York Mercantile Exchange.
"Even with supply underlying the market, the current interest for energy swirls around the economy and the dollar," said PFGBest analyst Phil Flynn.
Retail gas prices added eight-tenths of a cent overnight to $2.683, according to auto club AAA, Wright Express and Oil Price Information Service. That's 8.7 cents higher than last week and 5.4 cents above what it was at this point last year.
This week marks the first time that retail gas is exceeding prices 12 months ago, partly because prices are rising now, but also because gasoline was tumbling at this time in 2008 as the financial crisis spread.
In other Nymex trading, heating oil tumbled 5.82 cents to settle at $1.9969 a gallon. Gasoline for November delivery also fell sharply, 8.41 cents, to settle at $1.9864 a gallon. Natural gas for November delivery fell 27 cents to settle at $4.289 per 1,000 cubic feet.
In London, Brent crude for December delivery fell $2.06 to settle at $75.86 on the ICE Futures exchange.
Associated Press Writers Alex Kennedy in Singapore and Pablo Gorondi in Budapest, Hungary, contributed to this report.
More money-related links:
- Save money with Local Coupons
- Coupon Bug helps you save cash
- Saving with 6abc reports
- Share on the Saving with 6abc Message Board
- Track your stocks
- Follow Action News on Twitter
- Get Action News on your website
- Follow Action News on Facebook
- The latest Philadelphia headlines from the Delaware and Lehigh valleys