Oil falls below $100

Crude extends decline to near $99 a barrel on increase in U.S. crude supplies.

SINGAPORE (AP) -- Oil prices fell further Thursday after dropping by more than a dollar in the previous session on larger-than-expected increases in U.S. crude and gasoline supplies.

Prices remained supported near Tuesday's record close of $100.88 a barrel as the U.S. dollar tumbled to fresh lows against the euro and worries about the American economy drove more money into energy futures as a hedge against inflation.

The report by the U.S. Energy Department's Energy Information Administration showed that country's crude oil inventories rose by 3.2 million barrels, or 1%, to 308.5 million barrels.

Although that number is slightly lower than levels a year ago, it is well ahead of the 2.4 million barrel gain analysts had been expecting, according to a survey by Dow Jones Newswires. It was the seventh straight week the report showed a rise in crude inventories, suggesting the U.S. at least has more than enough oil to meet demand.

Light, sweet crude for April delivery lost 36 cents to $99.28 a barrel in Asian electronic trading on the New York Mercantile Exchange, late afternoon in Singapore.

The contract fell $1.24 to settle at $99.64 a barrel Wednesday after surging as high as $102.08 a barrel, a trading record. On Tuesday, the contract jumped $1.65 to settle at a record $100.88 a barrel.

The EIA data showed gasoline inventories also jumped more than expected -- by 2.3 million barrels to 232.6 million barrels; analysts had expected a more modest rise of 400,000 barrels. Refinery activity also increased much more than expected.

The weakening U.S. dollar also helped prop up prices. The 15-nation euro jumped to a record $1.51 against the greenback, meaning that crude remains a relative bargain for buyers overseas. Gold - another commodity seen as a hedge against inflation - also struck a record Wednesday.

In his testimony to the U.S. Congress Wednesday, Federal Reserve Chairman Ben Bernanke warned of sluggish business growth ahead, and signaled a willingness by the central bank to cut interest rates again. But Bernanke also noted that the Fed must keep a close watch on inflation given the sharp rise in energy prices and other costs.

Heating oil futures lost 1.16 cents to $2.7595 a gallon while gasoline futures dropped 2.12 cents to $2.4565 a gallon.

Natural gas futures advanced 3.8 cents to $9.098 per 1,000 cubic feet.

Brent crude rose 31 cents to $97.96 a barrel on the ICE Futures exchange in London.

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