Oil falls near $102, erasing previous day's gains, amid concern about US gasoline demand

The price of oil fell near $102 a barrel Thursday, erasing gains from the day before.

Benchmark U.S. crude for September delivery dropped $1.05 to $102.07 a barrel on the New York Mercantile Exchange. On Wednesday, the Nymex contract gained 73 cents after the Energy Department reported a far larger drop in U.S. crude inventories than what analysts had expected.

Brent crude for September delivery, a benchmark for international oils, fell 96 cents to $107.07 on the ICE Futures exchange in London.

The price of oil has stayed above $100 a barrel after a civilian jetliner was shot out of the sky last week over a part of eastern Ukraine controlled by pro-Russian separatists and as Israel's invasion of the Gaza Strip added to risks of instability in the Middle East.

A day after being buoyed by signs of strong demand for oil from U.S. refineries, traders reversed course and worried about weakness in demand for gasoline.

The U.S. data Wednesday showed oil supplies fell by 3.97 million barrels for the week ended July 11. Analysts had expected a drop of 2.6 million barrels, according to a survey by Platts. But gasoline supplies rose by 3.4 million barrels, almost three times the increase that analysts were looking for.

"The main factor causing the renewed decline in U.S. crude oil stocks is the still record-high rate of crude oil processing by U.S. refineries, though they are clearly turning more crude oil into refined petroleum products at present than is actually needed," the Commerzbank analysts' note said, highlighting weaker U.S. gasoline demand.

In other Nymex trading:

— Wholesale gasoline fell 2 cents to $2.84 a gallon.

— Heating oil was flat at $2.87 a gallon.

— Natural gas gained 8.5 cents to $3.85 per 1,000 cubic feet.