Oil prices tumbled more than 2 percent Wednesday, following a broad sell-off on Wall Street.
Benchmark crude fell $2.24, or 2.5 percent, to end the day at $86.29 per barrel in New York. Brent crude fell $2.76, or 2.5 percent, to finish at $108.39 in London. Prices dropped just before trading ended for the day, as stocks headed lower.
Investors found little to cheer about in economic news Wednesday. The Federal Reserve's "Beige Book" report showed only a slight increase in consumer spending last month with the economy expanding modestly in the Fed's 12 bank regions. And the Commerce Department said home builders started new projects at the fastest rate in almost a year and a half. The rate was still far below what economists consider to be a strong housing market.
"There's not much conviction in the market right now," PFG Best analyst Phil Flynn said. "I wouldn't be surprised to see those prices bounce back tomorrow."
The government also had a mixed reading about U.S. oil supply and demand on Wednesday.
The Energy Information Administration said supplies unexpectedly dropped by 4.7 million barrels last week. But the drop didn't mean the U.S. is using more crude. Rather, refineries imported less oil, gasoline and other fuels as demand fell last week. The nation's gasoline supplies fell by 3.3 million barrels last week. The drop comes as Sunoco and ConocoPhillips wind down refineries in Pennsylvania and other refineries slow down for seasonal maintenance.
At the pump, gasoline prices rose 1.5 cents on Wednesday to a national average of $3.474 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices have increased almost every day for nearly two weeks, rising to record levels for this time of year.
In other energy trading, heating oil was down 4.65 cents to end at $2.9812 per gallon. Gasoline futures fell 7.54 cents to finish $2.6715 per gallon. Natural gas rose 3.3 cents to end at $3.586 per 1,000 cubic feet.
Copyright 2011 The Associated Press.