NEW YORK (AP) -- The price of oil on Wednesday notched the biggest one-day drop since November, as supplies in the U.S. reached the highest level since July 1990
Benchmark oil for May delivery dropped $2.74, or 2.8 percent, to close at $94.45 a barrel on the New York Mercantile Exchange. The last time oil fell by that much in a day was on Nov. 20.
The Energy Department said crude oil supplies grew by 2.7 million barrels, or 0.7 percent, to 388.6 million barrels in the week ended March 29. The nation's supply of oil is now 7.2 percent above year-ago levels and the highest since July 27, 1990, when it was at 391.9 million barrels.
Oil production in the U.S. is about 7.1 million barrels a day, up 22 percent from a year-earlier and the highest in two decades. Output has jumped as oil companies use techniques such as horizontal drilling and hydraulic fracturing, or fracking, to unlock crude oil trapped in shale rock formations in the U.S. Meanwhile refineries are slowly ramping up production after undergoing maintenance in preparation for the switch to summer blends of gasoline. They operated at about 86 percent of capacity last week.
In addition demand for gasoline remains relatively week. The Energy Department said that demand over the four weeks ended March 29 was down 1.2 percent from a year ago, averaging about 8.5 million barrels a day. Cold weather last month may have kept some people off the road. And while gasoline supplies fell by 600,000 barrels last week, analysts were expecting a decline twice that size. Gasoline futures tumbled 13 cents, or 4.2 percent, to finish at $2.91 a gallon in New York.
Those who are on the highway are paying an average of $3.64 for a gallon of gas, according to AAA. That's down 11 cents from a month ago and 29 cents lower than at this time last year.
Exxon's Pegasus pipeline, which can carry as much as 96,000 barrels of crude oil from Illinois to Texas, remains closed after rupturing last week in central Arkansas. That has also weighed on oil prices this week.
Brent crude, used to price many kinds of oil imported by U.S. refineries, was down $3.58, or 3.2 percent, to end at $107.11 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Heating oil lost 9 cents to finish at $3 a gallon.
— Natural gas gave up 7 cents to end at $3.90 per 1,000 cubic feet.
Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.