SIOUX FALLS, S.D. — Oil prices rose Wednesday despite growing crude supplies and more signs of weakness in major sectors like retail and transportation.
Benchmark crude for September delivery gained 55 cents to settle at $71.97 a barrel on the New York Mercantile Exchange. Prices at one point Wednesday morning dipped below $70. In London, Brent prices rose $1.23 to $75.27 a barrel on the ICE Futures exchange, the first time it's closed above $75 this year.
Crude prices had jumped from below $63 a barrel last week on investor optimism the U.S. economy, the world's biggest oil consumer, is recovering from a severe recession.
But oil took a dive Wednesday after the Energy Department's Energy Information Administration said crude inventories increased by nearly 2 million barrels. That means that in the past two weeks, about 7 million barrels of crude have been put into storage as consumers and businesses pull back.
Any economic recovery is going to rely heavily on consumers, and energy prices can dip when data suggests that people are tucking money away, rather than spending it.
On Wednesday the Institute for Supply Management reported that the services sector contracted more sharply than expected in July. The ISM showed that retailers, financial services, transportation and health care sectors experienced the 10th straight month of declines. Those businesses make up 80 percent of U.S. economic activity.
Still, retail gasoline prices continue to rise because refiners are cutting back on production.
Demand for petroleum products was about a million barrels a day greater last year than it is now, so refiners have been trying to prevent a collapse in prices by making less gas, jet fuel and diesel.
Refiners are now are operating at just over 84 percent of their capacity, which is about 9 percent below what is typical at this time of year.
Retail gasoline prices jumped 2.4 cents overnight to a new national average of $2.585 for a gallon of regular unleaded, according to auto club AAA, Wright Express and Oil Price Information Service. That's more than 7 cents above last week's price, be still a little cheaper than last month.
In other Nymex trading, gasoline for September delivery fell half a cent to settle at $2.0512 a gallon and heating oil gained just over half a cent to settle at $1.9569. Natural gas for September delivery rose about 4 cents to settle at $4.042 per 1,000 cubic feet.
Associated Press Writers Alex Kennedy in Singapore and Pablo Gorondi in Budapest, Hungary, contributed to this report.