Oil slips on inventory surge

Surprise jump in crude stocks sends prices lower; gasoline inventories post surprise dip.

October 3 2007: 10:38 AM EDT

NEW YORK (CNNMoney.com) -- Oil prices retreated Wednesday after the government reported a surprising surge in oil inventories.

U.S. light crude for November delivery briefly fell below the $80 a barrel mark before rebounding. At 10:36 a.m. ET, it was up 12 cents to $80.17 a barrell after having been up 31 cents to $80.37 just prior to the report's 10:30 a.m. release.

In its weekly inventory report, the Energy Information Administration said crude stocks gained by 1.2 million barrels last week. Analysts were looking for a decline of 400,000 barrels according to Dow Jones.

Distillates, used to make heating oil and diesel fuel, fell by 1.2 million barrels while gasoline supplies eased by 100,000 barrels. Analysts were looking for an increase of 700,000 barrels in distillate supplies and a gain of 400,000 in gasoline stockpiles.

Crude prices have pulled back from record highs in December, but have remained above $80 a barrel, helped by the weakened U.S.