Oil prices drop on mixed US supply report

Oil prices on Wednesday finished lower after a US energy inventory report showed a drop in crude supplies but higher stocks of gasoline and other refined products. US benchmark West Texas Intermediate for July delivery slipped two cents to $102.64 a barrel on the New York Mercantile Exchange. European benchmark Brent oil for July delivery dropped 42 cents to $108.40 a barrel in London. The US Department of Energy said that American commercial crude stocks fell by 3.4 million barrels last week, far above expectations for a fall of 100,000 barrels. But gasoline stocks rose by 200,000 barrels and distillate stocks jumped two million barrels; the latter was far above the 700,000 rise projected by analysts. The increase in gasoline stocks suggests weak demand during the Memorial Day weekend, which was the unofficial kickoff of the annual summer driving season. US economic data was mixed. Payrolls company ADP reported 179,000 new jobs in May, down 36,000 from April and the lowest count in four months. But the Institute for Supply Management said its purchasing managers index (PMI) for the services sector rose to 56.3 in May from 55.2 in April, indicating accelerating growth, according to AFP.