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Oil drops on big increase in US supplies

The Associated Press
Wednesday, 24 Oct 2012 | 11:27 AM ET

NEW YORK -- The price of oil fell after the U.S. reported an unexpectedly large increase in crude supplies.

Oil supplies grew last week by 5.9 million barrels, or 1.6 percent, the Energy Department said. At 375.1 million barrels, the nation's oil inventory is 11.1 percent above year-ago levels. Analysts expected a much smaller increase.

Benchmark oil fell $1.04 or 1.2 percent, to $85.63 per barrel. The price has dropped about 7 percent since Thursday. Brent crude fell 11 cents to $108.14 per barrel in London.

Drivers are seeing lower prices at the gas station. The nationwide average for a gallon of regular has dropped 13 cents from a week ago, to $3.63. That's the biggest 7-day drop since late November, 2008, according to Oil Price Information Services analyst Fred Rozell.