Oil prices slipped below $111 a barrel Wednesday as a report showed U.S. crude supplies rose more than expected last week, suggesting weaker demand. By early afternoon in Europe, benchmark crude for June delivery was down 57 cents at $110.48 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.47 to settle at $111.05 on Tuesday. In London, Brent crude for June delivery was down 32 cents to $122.13 a barrel on the ICE Futures exchange. The American Petroleum Institute said late Tuesday that crude inventories rose 3.2 million barrels last week, more than the increase of 1.7 million barrels predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. Inventories of gasoline rose by 657,000 barrels while distillates fell 1.5 million barrels, the API said. Before last week's gain, U.S. gasoline inventories had fallen the previous three weeks. "Demand has clearly weakened, which is not surprising given the high price level," said analysts at Commerzbank in Frankfurt. The Energy Department's Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday. Global crude demand has remained robust, led by consumption in developing economies such as China and India. India's central bank, however, raised interest rates on Tuesday and there were market concerns that China also would tighten its monetary policy. Struggling oil prices have also been tied to a general slump in commodities, led by a recent fall in the price of silver. "We are continuing to see a growing number of commodity complexes struggle," said Edward Meir of MF Global in New York, noting that high inflation and interest rates in the second half of 2011 "will be far less hospitable for the asset class." Oil prices also gained some support from a weaker dollar, which made crude cheaper for investors holding other currencies. In other Nymex trading in June contracts, heating oil fell 0.85 cent to $3.1823 a gallon and gasoline lost 1.6 cents to $3.3134 a gallon. Natural gas futures dropped 0.6 cent to $4.664 per 1,000 cubic feet. ___ Alex Kennedy in Singapore contributed to this report.
