OIL prices fell yesterday on a stronger dollar after the US government reported that crude stockpiles rose last week as expected.

Oil dropped further in the afternoon as the dollar rose versus other major currencies. Oil, which is priced in dollars, tends to fall as the dollar rises and makes crude barrels more expensive for investors holding foreign money.

Benchmark West Texas Intermediate crude, which sets the price of much of the oil produced in the US, fell by US$1.28 to settle at US$105.43 per barrel in New York.

Brent crude, used to price oil imported by US refineries, fell by US$1.25 to finish at US$124.97 per barrel in London.

The EIA report also noted that energy demand remains weak in the US Oil demand dropped 5.4 percent last week while wholesale gasoline demand fell by 7.2 percent when compared with a year ago.

Earlier in the day, the International Energy Agency said that global oil supplies fell by 200,000 barrels per day in February, even as members of the Organization of Petroleum Exporting Countries increased production. Government energy experts predict that global supplies will continue to fall. Tighter supplies could push oil and gasoline prices higher.

Saudi Arabia's top oil official said yesterday that his country and other oil exporters are ready to produce more to offset any supply shortfall, if needed. US energy officials want major oil producers to immediately address the supply shortage, afraid that high prices could put the economic recovery at risk. But the Saudi oil minister said the market for now remains "generally balanced," with what he said is ample production and refining capacity.

In other energy trading, heating oil and gasoline futures both lost less than a penny to end at US$3.2618 and US$3.347 per gallon, respectively. Natural gas futures fell by 1.5 cents to end at US$2.284 per 1,000 cubic feet.

Source:shanghaidaily