Oil prices fell Thursday after disappointing economic news fanned speculation about what steps the Federal Reserve may take to bolster the U.S. economy.
Benchmark crude lost 32 cents to settle at $82.69 a barrel on the New York Mercantile Exchange. Trading was volatile with the November contract expiring Thursday.
At the pump, prices continued to creep up, reaching a national average of $2.828 for a gallon of unleaded regular gasoline, according to a survey by AAA, Wright Express and the Oil Price Information Service. The price was 6 cents more than a week ago and 34.7 cents more than a year ago.
Speculation among traders and investors is intensifying about what the Fed might do next month to boost the economy following two government reports that showed jobless claims rose last week for the first time in three weeks and wholesale prices edged up.
The increase in claims for unemployment benefits is a sign that employers are not adding workers, and unemployment is one of the key issues the Fed will consider when looking at ways to help the economy.
The Labor Department said the producer price index, which measures prices at the wholesale level, increased 0.4 percent in September. Moderate price inflation allows the Federal Reserve to keep the short-term interest rate it controls at a record low of nearly zero. Low inflation also makes it more likely the Fed will launch another effort to lower longer-term rates by purchasing Treasury bonds.
Speculation about Fed moves has contributed to a weaker dollar against other currencies over the past month. Since commodities are priced in dollars, traders using other currencies can buy more product and that has boosted oil prices.
Meanwhile, the Energy Department said Thursday that supplies of oil, gasoline and distillates fell last week. Crude inventories dropped by 400,000 barrels to 360.5 million barrels, gasoline stockpiles fell 1.8 million barrels to 218.2 million barrels and distillates, which include heating fuel and diesel, shrank by 300,000 barrels to 172.2 million barrels.
Platts senior oil analyst Linda Rafield said crude stocks fell because imports dropped to an eight-and-a-half month low, allowing inventories to decline. Rafield also pointed out that U.S. oil demand fell to the lowest level since the first week of December 2009, "in line with weakness of the economy."
Declining inventories give traders "additional reason to believe that the highest inventories are behind us," Cameron Hanover energy consulting agency said in a report. "We still feel that this market complex wants to move higher, if it can find any reasonable reason to do so."
Natural gas inventories grew by 91 billion cubic feet to 3.59 trillion cubic feet for the week ended Oct. 8, according to the Energy Information Administration. Natural gas lost 3.9 cents to settle at $3.657 per 1,000 cubic feet on the Nymex.
In other energy trading, heating oil gave up 1.68 cents to settle at $2.2839 a gallon and gasoline dropped 2.96 cents to settle at $2.1365 a gallon.
In London, Brent crude fell 11 cents to settle at $84.53 a barrel on the ICE Futures exchange.
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Associated Press writers Christopher S. Rugaber in Washington, Barry Hatton in Lisbon, Portugal, and Alex Kennedy in Singapore contributed to this report.
In other Nymex trading in November contracts, heating oil rose 0.34 cent to $2.3041 a gallon and gasoline gained 0.13 cent to $2.1674 a gallon. Natural gas fell 5.6 cents to $3.64 per 1,000 cubic feet.
In London, Brent crude added 22 cents to $84.86 a barrel on the ICE Futures exchange.
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Associated Press writers Christopher S. Rugaber in Washington, Barry Hatton in Lisbon, Portugal, and Alex Kennedy in Singapore contributed to this report.
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