Oil rises slightly after government reports crude supplies drop unexpectedly

Oil rises to $71 on drop in oil supply

NEW YORK — Oil prices rose Wednesday after the government reported an unexpected drop in crude supplies.

Benchmark crude for November delivery added 12 cents at $71 on the New York Mercantile Exchange. In London, Brent crude rose 2 cents to $68.58 on the ICE Futures exchange.

Prices increased after the Energy Information Administration reported that the nation’s oil supply dropped by 1 million barrels last week. Analysts were expecting stockpiles to grow by 1.9 million barrels.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said crude demand is still unimpressive, however, noting that the U.S. still has much more oil in storage than last year.

American petroleum consumption has cooled so much that Sunoco, Inc. announced Tuesday that it would idle its Eagle Point refinery in Westville, N.J. As part of the decision, Sunoco said it would furlough 400 workers and cut its dividend.

“Most people look at Sunoco and wonder, who else is going to shut down until things improve?” Kloza said.

The EIA report also said that gasoline inventories grew by 2.9 million barrels last week and distillate fuel supplies grew by 700,000 barrels. Analysts were expecting smaller increases for both.

At the pump, retail gas prices ticked higher overnight by less than a penny to a new national average of $2.465, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular gas is 11.8 cents cheaper than last month and $1.015 cheaper than a year ago.

In other Nymex trading, gasoline for November delivery gave up 1.64 cents to $1.7563 per gallon, and heating oil gained less than a penny to $1.8201 a gallon. Natural gas for November delivery added 10.1 cents to $4.981 per 1,000 cubic feet.

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Associated Press writers George Jahn in Vienna and Eileen Ng in Kuala Lumpur, Malaysia contributed to this report.