WTI drops nearly $5; China to raise fuel prices

Crude oil prices fell Thursday after China announced that it will raise fuel prices starting on Friday.

The reports of the price hikes said that the price of gasoline will go up 16 percent and the price of diesel will rise by 18 percent, while prices for aviation kerosene and electricity will also rise.

Also pushing prices lower were gains for the US dollar as well as comments from Iraq that it is close to signing agreements with several Western oil companies that will return them to activity in that nation, raising hopes for increased production there.

On the other hand, investors paid little attention to reports that there had been an attack on a Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) oil field in Nigeria.

July contracts for West Texas Intermediate crude had dropped $4.74 to $131.94 per barrel by the end of floor trade on the New York Mercantile Exchange, while Brent crude was down $2.61 to $133.83 on the ICE Futures Europe exchange in London.

Nymex July gasoline futures were down 9 cents to $3.38 per gallon while August heating oil was also down 9 cents, to $3.76 per gallon and August natural gas dropped 28 cents to $12.92 per 1,000 cubic feet.

The US Energy Information Administration reported that natural gas inventories were up by 57 billion cubic feet last week.

In a separate report, the US Transportation Department reported that demand for gasoline fell in the United States in April as Americans drove 1.4 billion fewer highway miles compared to the same month last year.

The at-the-pump price for regular unleaded gasoline in the US was down 0.2 cent overnight to a national average of $4.072 per gallon.