Oil nears $75 mark, falls back by midday

| 5/3/2006

Oil neared the $75 per barrel mark in early trading on the New York Mercantile Exchange on Wednesday, May 3, but fell back to $73.10 per barrel by midday.

The Associated Press reported that analysts credited the drop to a report from the Department of Energy showing that gasoline demand has remained flat for the past four weeks and that fuel supplies are growing as refinery output increases.

Still, prices are not expected to drop too much as tensions with Iran, unrest in Nigeria and increasing global demand will keep them above $70 per barrel, The AP reported.

The report suggests, however, that high fuel prices may be curbing demand for gasoline among passenger car drivers.

The AP reported that average daily gasoline demand during the past four weeks in the U.S. has been about 9.127 million barrels per day, not much higher than the 9.125 million barrels a day demand from a year ago.

The Energy Department report showed that, since the beginning of the year, average daily demand has been just about 9 million barrels per day, slightly lower than 2005.