The price of oil fell below $100 a barrel for the first time in three weeks Wednesday, as reports showed U.S. economic growth stalled in the first quarter and oil supplies in the U.S. rose to record levels last week.
Meanwhile, AAA said U.S. gasoline prices are near their springtime peak and drivers should be paying less at the pump by Memorial Day.
Benchmark U.S. crude oil for June delivery dropped $1.54, or 1.5 percent, to close at $99.74 a barrel on the New York Mercantile Exchange. Brent crude, an international oil benchmark, fell 91 cents to $108.07 on the ICE Futures exchange in London.
The U.S. Commerce Department said economic growth slowed to 0.1 percent in the first three months of the year as winter storms chilled business activity. The sharp slowdown – while worse than expected – is likely to be temporary, as growth rebounds with warmer temperatures.
The Energy Department said oil supplies rose by 1.7 million barrels last week. While the increase was less than expected by analysts, it still pushed the nation’s supply to a record 399.4 million barrels. In addition, gasoline supplies rose by 1.6 million barrels, whereas analysts had expected a decline.
Rising oil exports by Libya – though still far from earlier levels near 1.4 million barrels a day – also contributed to the drop in prices. Analysts cited information from Libya’s National Oil Corporation showing current exports at 285,000 barrels a day, up from 230,000 barrels a day in the first half of April.
In the U.S., drivers received a welcome forecast from auto club AAA. In a monthly report, AAA said the national average of $3.69 “likely is at or very near its peak for this spring.” AAA expects prices to decline heading toward Memorial Day as gasoline production outpaces demand.
The national average rose 14 cents in April, the biggest increase for the month in three years. Still, the average price isn’t expected to top last year’s peak of $3.79 a gallon, AAA said.
In other energy futures trading on Nymex:
— Wholesale gasoline lost 4 cents to $2.96 a gallon.
— Heating oil shed 4 cents to $2.93 a gallon.
— Natural gas retreated 2 cents to $4.82 per 1,000 cubic feet.