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updated: 3/28/2013 8:04 AM

Oil pulls back from 5-week high; pump price drops

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By Associated Press

NEW YORK -- The price of oil retreated Wednesday, after a string of gains had pushed it to the highest level since late February.

Benchmark oil for May delivery was down 55 cents to $95.79 per barrel in morning trading on the New York Mercantile Exchange.

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Oil gained $3.89, or 4.2 percent, in the previous three sessions to a five-week high of $96.34 a barrel. The increase was driven by strong U.S. economic data and the European Union's decision to give a bailout to struggling Cyprus.

But analysts say it is too soon to forget about the debt crisis in Europe, especially after Cyprus teetered on the brink of bankruptcy until a deal was reached early Monday.

"The events in Cyprus have provided another very visible -- albeit extreme -- illustration of the financial problems and uncertainties in Europe, which are holding back the global recovery," analysts at Capital Economics said.

The uncertainty in Cyprus has pushed the euro lower compared with the dollar. A stronger dollar makes oil a less enticing investment for traders using other currencies. On Wednesday, the euro was down to $1.2774 from $1.2861 late Tuesday in New York.

A report showing an increase in U.S. oil supplies also weighed on oil. The government said the nation's crude oil supplies rose by a bigger than expected 3.3 million barrels last week. At 385.9 million barrels, U.S. crude inventories are 9.2 percent above year-ago levels,

Meanwhile, prices at the pump are still dropping. The average price for a gallon of gas fell to $3.65 a gallon, about 13 cents lower than a month ago and 25 cents less than this time last year.

Brent crude, used to price many kinds of oil imported by U.S. refineries, fell 11 cents to $109.25 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

-- Wholesale gasoline was flat at $3.11 a gallon.

-- Heating oil rose 2 cents to $3.02 a gallon.

-- Natural gas advanced by 6 cents to $4.05 per 1,000 cubic feet.

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