Oil prices fall by more than 4%

Oil prices are off their highs - for now

Oil prices fell by more than 4% on Wednesday as US inventory data showing crude oil was sufficient to meet demand helped to ease supply fears.

US crude oil settled at $63.25 a barrel in New York, down $2.83, while in London Brent crude ended down $2.52 at $62.56 after the announcements.

Figures from the US Department of Energy showed that crude oil stockpiles rose by 0.3m barrels to 321.1m.

But analysts said gasoline prices could still move higher in the summer months.

Volatile future

Gasoline supplies fell by 5m barrels to 198.1m, against an expected 1.4m fall.

A number of factors mean that despite Wednesday's price decline, further price rises cannot be ruled out.

Concerns still surround supplies from Iran, and demand from fast-growing nations - such as China - remains strong.

Added to that, US refineries are operating at close to capacity, although recent concerns about refining bottlenecks have eased somewhat.

Maximum output from such processing plants means maintenance work is difficult to carry out and means new outages are possible.

Simon Wardell of Global Insight told Bloomberg TV that "because stocks are really quite low now, supplies are still going to be a concern over the coming months".

Oil prices rose to a peak of $67.10 a barrel in the US last week when US refinery fears were at their height.

In l980 oil hit an all-time high (adjusted for inflation) of more than $80 a barrel following the Iraq-Iran war.