Oil rebound weakens effect of supply release

NEW YORK — The sway that non-OPEC governments had over oil and gasoline prices petered out in less than a week.

Benchmark crude hit $95.21 per barrel Wednesday on the New York Mercantile Exchange. Over two days, oil has recovered the loss from last Thursday when the U.S. and other oil-importing countries said they'd dump emergency oil supplies onto the market.

Brent crude, which is used to price many international oil varieties, also rebounded. Although at $111.95 per barrel, it's still about 2 percent below where it was last week.

The swift rebound in oil means that motorists won't see as big of a discount at the gas pump as expected. By Wednesday afternoon, gasoline futures recovered about 20 of the 26 cents per gallon that were lost after the International Energy Agency, which includes the U.S., said it would make 60 million barrels of crude and other fuels available this summer.

Gasoline for July delivery added 9.83 cents, about 3.5 percent, to $2.9123 per gallon in afternoon trading on the Nymex.

Patrick DeHaan, a senior petroleum analyst at GasBuddy.com, said the IEA announcement may have cut about 2 to 5 cents off the price of retail gasoline in the last week. "The rest was negated because of the increase in oil during the last 24 hours," DeHaan said.

The national average gasoline price fell nearly a penny overnight to $3.543 per gallon. But prices rose in some parts of the country, especially Rust Belt states, DeHaan said. In Ohio, for example, the average pump price increased 3.5 cents to $3.351 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Oil has rallied for the past two days as Greek lawmakers prepared for and passed financial reforms that were required for the country to receive the next installment of an international aid package. Without that money, the country risks defaulting on its debts. A bullish report on oil and crude supplies in the U.S. also boosted prices on Wednesday.

"The IEA did move the market, but the lesson is that many other things can move it too," Cameron Hanover analyst Peter Beutel said.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said the decision in Greece eased concerns about a spreading financial crisis in Europe.

"Nobody wanted a regional collapse that would affect western banks," Kloza said. "There is a sense now that this is going to go away for a few months."

The dollar lost ground to the euro and other major currencies, which boosted oil as well. Oil, which is priced in dollars, tends to rise as the greenback falls and makes crude barrels cheaper for investors holding foreign currency.

Meanwhile, the Energy Information Administration said U.S. oil supplies dropped more than expected last week, losing 4.4 million barrels to a total of 359.5 million barrels in storage. That tally doesn't include the 30 million barrels that the U.S. is expected to release from the Strategic Petroleum Reserve in August.

Gasoline supplies also fell unexpectedly by 1.4 million barrels, according to the EIA report. Oil demand in the U.S. fell by 1.7 percent while gasoline demand dropped 0.3 percent when compared with the same period last year.

In other Nymex trading for July contracts, heating oil added 9.7 cents to $2.9389 per gallon and natural gas dropped 1.5 cents to $4.358 per 1,000 cubic feet.