NEW YORK (CNNMoney.com) - Oil prices slipped Wednesday following a government report showing gasoline supplies swelled twice as much as expected.

U.S. light crude for March delivery closed down 54 cents to settle at $62.55 a barrel on the New York Mercantile Exchange.

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The Energy Information Administration (EIA) said gasoline supplies ballooned by 4.3 million barrels. Meanwhile, crude stocks fell by 300,000 barrels, while distillates, used to make heating oil, declined by 300,000 barrels.

Analysts were looking for a 1.9 million barrel jump in gasoline supplies, a 300,000 barrel rise in crude stocks and a 200,000 barrel build in distillates, according to Reuters.

"There's just quite a bit of it around right now," said Tim Evans, senior energy analyst at IFR Markets, an industry newsletter. "It raises the question: 'Where's the shortage? And why are we at historically high prices?'"

Evans wasn't just speaking of gasoline stocks.

The EIA report said crude stocks are now well above the upper end of the average range for this time of year, as are distillate and gasoline supples.

Oil prices fell by more than three percent Tuesday in anticipation of a stockpile build.

Analysts told Reuters that big money funds had been pouring cash into commodities over the last several months and were bailing out before Wednesday's report.

Although crude prices have fallen by more than 5 percent this week, they are still riding a rally that has seen prices double in the last two years on strong demand from the U.S., China and India.

Helping keep prices high, the EIA increased its estimates Tuesday for U.S. and worldwide oil demand. The agency now says the U.S. will use 20.91 million barrels per day (bpd) in the April-June period, a projection increase of 180,000 barrels.

The agency raised its projection for total world oil demand in the same period by 200,000 barrels to 83.8 million bpd.

And concerns loomed over a possible embargo of Iranian oil after the United Nation's nuclear watchdog said it would report the country to the Security Council for possible violations, although action isn't expected until next month.

Several governments, including the U.S., believe Iran is nursing a clandestine nuclear weapons program in violation of international treaties it has signed. Iran contends its nuclear ambitions are for peaceful power production purposes.

Some analysts have said an embargo of Iranian oil could push crude prices to over $130 a barrel. (Click here for more)

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