LONDON, May 17: Oil prices sank by over a dollar on Wednesday as traders absorbed news of buoyant US motor fuel stocks, with just two weeks until the start of the peak-demand American driving season.

New York’s main contract, light sweet crude for delivery in June, slid $1.08 to $68.45 per barrel in pit trading.

In London, Brent North Sea crude for July delivery fell by $1.19 to $68.89 per barrel in electronic deals.

The Department of Energy said on Wednesday that gasoline or petrol reserves rose by 1.3 million barrels to 206.4 million barrels in the week to May 12.

That compared with market forecasts of a 1.5-million-barrel build. Crude prices were reacting to the “rather bearish” news that gasoline stocks were continuing to climb, despite falling refinery activity, according to Alexandre Kervinio, analyst with Societe Generale.

Gasoline stocks are moving into sharp focus ahead of the US driving season, starting at the end of May, when many Americans take to their cars for holidays.

The DoE added that crude oil reserves fell by just 100,000 barrels to 346.9 million last week, compared with analysts’ estimates of a drop of one million barrels.

Crude stocks had fallen far less than expected, Kevinio added.

Inventories of distillates, which are used to make diesel and heating oil, slipped by 100,000 barrels to 114.6 million barrels. Market watchers had expected a rise of 800,000 barrels.—AFP