NEW YORK – Oil prices plunged another 3 percent Thursday as news U.S. gasoline stocks had risen for the first time in two months eased supply worries ahead of the summer driving season.
U.S. light sweet crude settled down $2.34 a barrel at $69.94, extending a nearly 7 percent slide in two days. Brent futures fell $2.36 to $70.29.
"People can talk about geopolitics all they want, but gasoline is bringing this market down," said Jim Ritterbusch of Ritterbusch and Associates. "U.S. demand is slowing, and refiners are coming back on line."
A U.S. government report on Wednesday showed gasoline inventories in the United States, the world's largest energy consumer, up 2.1 million barrels last week as the nation's refiners boosted production and demand slowed.
Refiners upped plant utilization by 0.6 percentage points to 88.8 percent of capacity, while gasoline demand over the past four weeks averaged the same as a year ago -- indicating zero growth in consumption.
U.S. gasoline futures slumped 9.11 cents, or 4.4 percent, to $1.9946 a gallon.
Some analysts said that Americans were showing signs of slightly adjusting their driving habits to ease the sting of near-record retail gasoline prices, using smaller cars and cutting back on discretionary road trips.
Crude oil prices had struck a record last month of $75.35 a barrel, driven largely by concerns that Iran's face-off with the West over its nuclear ambitions would disrupt supplies from the OPEC nation.
This week's steep slide in prices could be short-lived if the backdrop of rocky world politics remains a threat to reliable energy supply.
Around a quarter of OPEC producer Nigeria's production remained shut in because of militant unrest, and the dispute between Iran, the world's fourth largest oil exporter, and the West continued to simmer.
The United States, Britain and France on Wednesday pressed ahead with a U.N. Security Council resolution demanding that Iran curb its nuclear ambitions and said they would push for targeted sanctions if it did not.
The text, which is bound to be modified, does not call for sanctions but is tougher than expected. It threatens to consider "further measures as may be necessary," a veiled warning of sanctions the West wants if Iran defies council demands.
Russia, which has veto power in the council, made clear it would not support any sanctions but indicated it could back an initial resolution if it were modified.
U.S. President George W. Bush in the past has not ruled out military options, but during talks in Washington on Wednesday with German Chancellor Angela Merkel he placed the emphasis on diplomacy.
Adjusted for inflation, U.S. crude prices are near the highs that coincided with a sharp reduction in demand growth during the 1980s.
"Crude oil prices are now less than $20/barrel from the monthly peak of $89/barrel reached in November 1979," Barclays Capital wrote in a daily report.