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Crude oil prices drop 4.5% on lower demand for petroleum products

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Associated Press / March 20, 2008

NEW YORK - Oil prices pulled back sharply yesterday after the government released data suggesting that the high price of oil and gasoline are depressing demand for petroleum products.

The demand numbers in the Energy Information Administration's weekly inventory report overshadowed data showing supplies of oil grew less than expected last week, while gasoline and heating oil supplies fell.

Gas prices at the pump, meanwhile, slipped lower for the third day while diesel fuel rose to another record.

Overall consumption of oil and its products fell 3.2 percent over the last four weeks compared to the same period last year, the EIA said. Demand for gasoline fell 1 percent over the same period.

Light, sweet crude for April delivery fell $4.94, or 4.5 percent, to settle at $104.48 a barrel on the New York Mercantile Exchange, the largest one-day price drop for a front-month oil contract since 1991. The April contract expired at the end of yesterday's session, and trading was much heavier in May oil futures, which fell $5.96 to settle at $102.54 on the Nymex.

Investors shrugged off EIA data showing crude oil supplies grew 200,000 barrels last week, much less than the 2.1 million barrel increase analysts surveyed by Dow Jones Newswires, on average, had expected.

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