Oil traders stopped short of bidding the price of oil above $100 a barrel Wednesday, deterred by reports of a rise in supplies at key oil posts in the Midwest.
Meanwhile, inventories of light-sweet crude oil overall have dipped.
The mixed news did little to change investors' views that oil is still in tight supply as demand rises.
"It's two steps forward, then one back in terms of this week's inventory cushion," said Tim Evans, an analyst at Citigroup Inc. in New York.
Light, sweet crude for January had risen as high as $99.29 a barrel in electronic trading to break the previous intraday record of $98.62 set earlier this month.
But after the report, prices began to fall, slipping 70 cents to $97.33 a barrel at midday on the New York Mercantile Exchange.
The Energy Department's Energy Information Administration said in its weekly report that oil inventories fell by 1.1 million barrels during the week ended Nov. 16. Analysts had expected an increase of 700,000 barrels.
Inventories at the closely watched Nymex delivery terminal in Cushing, Okla., rose last week by 1.2 million barrels, however. It was the first substantial increase in Cushing stocks in weeks, and the largest since a 1.9 million barrel increase during the week ended Aug. 31.
The Cushing terminal is the physical delivery point for Nymex crude. Falling supplies there are seen as a symptom of a tight market. Those concerns ease when Cushing inventories rise.
Consumers won't see much change at the pump. Gas prices fell 0.1 cent overnight to a national average of $3.089 a gallon, according to AAA and the Oil Price Information Service.
Supplies of gasoline rose last week by 200,000 barrels. Analysts had expected a 700,000-barrel increase.
The oil market's rally trigged a slide in the stock market.
From NPR reports and The Associated Press
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