NEW YORK (AP) -- Oil prices hit two-month lows Wednesday as government data showed that energy demand continues to slump.
Benchmark crude for January delivery gave up $1.95 to settle at $70.67 a barrel on the New York Mercantile Exchange. Prices dropped as low as $70.13 a barrel earlier in the day.
The Energy Information Administration said the nation's consumption of petroleum products fell to its lowest level since the week of July 10. Demand for gasoline in the U.S. has been hit so hard by the economic downturn, imports are falling away and helping to drive up the amount of unused fuel in storage.
Imports over the past four weeks are down 1.4 million barrels a day compared with last year. That is significant because a gallon of gas was well below $2 per gallon at this time last year, meaning little incentive to ship gas to the U.S.
As a result, more than 7 million barrels of gasoline have been pumped into U.S. stockpiles in the past three weeks, according to the EIA report.
"We're expecting consumption to return with the (economic) rebound, but so far we're not seeing it," said Andrew Lebow, senior vice president and broker at MF Global.
The EIA report also showed U.S. crude supplies dropped last week, though that is typical toward the end of the year as refineries cut down on their inventories.
At the pump, retail gas prices dipped slightly to a national average of $2.633 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.1 cents cheaper than it was last month, but it is 93.5 cents more expensive than a year ago when the economy was in a tailspin.
In other Nymex trading in January contracts, heating oil lost 8.16 cents to settle at $1.9093 a gallon while gasoline lost 6.73 cents to settle at $1.8573 a gallon. Natural gas gave up 21.6 cents to settle at $4.898 per 1,000 cubic feet.
In London, Brent crude for January delivery fell $2.80 to settle at $72.39 on the ICE Futures exchange.
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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
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