Oil Prices Decline Despite Falling Supply

Oil prices fell Wednesday despite another decline in crude supply, with lingering doubts about whether people and businesses will be using more energy anytime soon.

Crude supplies have fallen in seven out of the past eight weeks, according to a government report Wednesday.

Benchmark crude for August delivery fell 58 cents to settle at $69.31 a barrel on the New York Mercantile Exchange with one trading day left in a holiday-shortened week. In London, Brent prices lost 51 cents to settle at $68.79 a barrel on the ICE Futures exchange.

All major fuel futures fell on Nymex Wednesday, and gasoline led the way. Average retail gasoline prices have now fallen for 10 straight days.

The Energy Department's Energy Information Administration said in its weekly report that the massive surplus of oil in the United States continued to shrink last week. Crude supplies fell more than some expected, losing 3.7 million barrels for the week ended June 26.

Falling supplies are part of the reason energy prices have been rising for months, but that doesn't necessarily mean energy consumption is rebounding strongly.

Some of the biggest users of energy, heavy industry and manufacturing, have cut thousands of jobs. Many of the people who have lost jobs are no longer commuting because the can't find work, meaning they aren't using as much gas.

Crude levels are falling, but not necessarily because more is being used. Imports are falling. Crude imports over the last four weeks are down nearly 800,000 barrels per day.

Oil exporting countries slashed production after the global economic downturn sent crude prices plunging from near $150 per barrel last summer to just above $30 per barrel by December.

While prices have been surging for two months, a lot of that has been driven by money from Wall Street that is using crude only to hedge against inflation.

"There are some people, like me, who think 'So, what if there's less oil? There's still plenty out there," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.