Oil Drops Near $72 a Barrel

Oil prices fell Wednesday as traders awaited the release of a U.S. government fuel stocks report expected to show gasoline inventories rose last week.

The data was expected to show another drop in crude oil inventories, but increases in both refinery activity and gasoline supplies, according to a Dow Jones Newswires survey of analysts.

September Brent crude fell 26 cents to $71.54 a barrel on the ICE Futures exchange in London.

Oil futures were supported by news that ConocoPhillips shut down gasoline-producing equipment at two refineries, one in New Jersey and the other in Pennsylvania. One of the refineries, at Linden, New Jersey, was expected to be online Friday, so support could be short lived.

After last week's report from the U.S. Energy Department's Energy Information Administration showed a surprisingly large drop in oil inventories, oil rallied to a new all-time high of $78.77 a barrel. But crude gave up those gains in the same session as investors came to view the increase in gasoline production as more important.

Several weeks of growing gasoline supplies and refinery activity have alleviated some supply concerns, sending gas futures and retail prices sharply lower. That trend is expected to continue. Analysts surveyed by Dow Jones Newswires, on average, expect refinery utilization to have grown by 0.1 percentage point to 93.7 percent of capacity in the week ended Aug. 3.

That increased activity drew down crude inventories by 2 million barrels last week, and increased gasoline supplies by 1 million barrels, analysts say. Distillates, which include heating oil and diesel fuel, were expected to have gained 1.8 million barrels.

Heating oil futures lost 0.45 cent to $1.9596 a gallon (3.8 liters) while gasoline prices lost 0.73 cent to $1.9369 a gallon. Natural gas futures fell 1.5 cents to $6.186 per 1,000 cubic feet.

Some analysts see the recent price declines as a correction in a bullish market, driven largely by speculators selling off positions to lock in profits