Oil prices rise after US supply report (AP)

NEW YORK ? Oil prices are slightly higher Wednesday following government reports that U.S. supplies didn't grow as much as expected last week.

Benchmark U.S. crude rose by 18 cents to $98.59 per barrel in New York. Brent crude, which is used to price foreign oil varieties, rose by 29 cents to $116.52 per barrel in London.

The Energy Information Administration reported that the nation's crude supplies increased by 300,000 barrels last week, much less than the increase of 2.25 million barrels analysts expected.

Analysts were betting that refineries would continue to replenish stockpiles as they usually do in the first few months of the year. But last week they also cut back on imports as oil and gasoline demand dropped.

The EIA said that U.S. petroleum demand fell by 4.8 percent to a four-week average of 18.1 million barrels per day. That's the weakest four-week average since April 1997, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Oil prices had risen earlier in the day, to above $100 per barrel, following an industry survey that predicted supplies would move in the opposite direction, dropping by 4.5 million barrels. The EIA report countered that.

"That took the wind out of the sails" of energy commodities, said Gene McGillian, a broker and oil analyst at Tradition Energy.

Meanwhile, doubts about Greece's ability to follow through with spending cuts and other austerity measures necessary to avoid bankruptcy pushed the dollar higher. Oil, which is priced in dollars, tends to drop in value as the dollar rises and makes crude more expensive for investors holding foreign money.

Retail gasoline prices were essentially unchanged Wednesday at a national average of $3.48 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline is at the highest price ever for this time of year. A gallon of regular is 11 cents higher than a month ago and 37 cents higher than at the same time last year.

In other energy trading, heating oil fell by a penny to $3.18 per gallon, while gasoline futures rose by about 1 cent to $2.94 per gallon. Natural gas futures rose by a penny to $2.48 per 1,000 cubic feet.

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Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

Source: http://us.rd.yahoo.com/dailynews/rss/energy/*http%3A//news.yahoo.com/s/ap/20120208/ap_on_bi_ge/oil_prices

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