Oil Prices Slump on Surprising Gas Supplies

Oil prices hung below $78 a barrel Thursday in Asia as an unexpected jump in U.S. gasoline supplies cast doubt on the strength of a recovery in crude demand.

Benchmark crude for December delivery was up 10 cents to $77.56 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.09 to settle at $77.46 on Wednesday.

The Energy Information Administration said Wednesday that gasoline stocks rose 1.7 million barrels last week while analysts had expected a fall of 1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude supplies rose 900,000 barrels last week, the EIA said.

“The bearish EIA report featured some unusually negative gasoline figures,” Galena, Ill.-based consultancy Ritterbusch and Associates said in a report. “We feel that further price declines will be forthcoming.”

Since last week, crude has retreated from $82 a barrel, the high for 2009, as the U.S. dollar gained back some of its losses from recent months.

The euro rose to $1.4736 on Thursday from $1.4714 while the dollar gained to 90.76 yen from 90.64.

In other Nymex trading, heating oil rose 0.1 cent to $1.998 a gallon. Gasoline for November delivery dropped 1.3 cents to $1.9734 a gallon.

In London, Brent crude for December delivery rose 20 cents to $76.06 on the ICE Futures exchange.

10/29/2009 4:30 AM ALEX KENNEDY, Associated Press Writer SINGAPORE