NEW YORK (CNNMoney.com) -- Oil prices ended Wednesday higher, just over $70 a barrel, after falling below $69 earlier in the session on a government report saying supplies of crude oil and gasoline posted a surprise build.

U.S. light crude for October delivery rose 32 cents to settle at 70.03 a barrel on the New York Mercantile Exchange. Oil fell as low as $68.65 earlier in day.

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In its weekly inventory report, the Energy Information Administration said crude stocks rose by 2.4 million barrels last week. Analysts were looking for a drop of 1.5 million barrels, according to Reuters.

Gasoline supplies increased by 400,000 barrels, while distillates, used to make heating oil and diesel fuel, fell by 1.3 million barrels, in line with estimates. Analysts were looking for a 700,000 barrel decline in gasoline supplies and a 1.3 million barrel build in distillates.

The EIA report said crude, gasoline and distillate levels were above average for this time of year, with crude inventories "well above the upper end of the average range."

One analyst said it's not just high crude inventories but a host of other factors that are causing oil prices to fall.

"We survived the gasoline season, and to the extent that the U.S. economy appears to be slowing, you could see oil prices come down significantly," said John Kilduff, an energy analyst at Fimat in New York.

"There's a real potential for crude to come down to the $50s by the end of the year."

Crude closed below the $70 a barrel mark Tuesday for the first time since June 20.

Oil has slipped from its record trading high of $78.40 set last month and traded in a band in the low $70s for over a week. But prices are still up about 12 percent so far this year.

Pushing prices down in recent weeks were a cease-fire between Israel and Hezbollah, the end of the summer driving season, concerns over global economic growth and high stockpile levels.

Oil tumbled $2 Monday after Hurricane Ernesto lost strength and became less of a threat to oil facilities in the Gulf of Mexico.

Traders had put a storm premium on oil prices following last years devastating hurricanes that knocked out almost all production and refining in the Gulf, but some of that premium is easing as 2006 has so far been a mild storm year.

Supporting prices was continued tensions with Iran over that country's nuclear program.

Iran has until Thursday to agree to halt the enrichment program, which Tehran maintains is part of a civilian nuclear program to generate power.

Last week, Tehran offered to resume negotiations about its nuclear program but did not agree to halt uranium enrichment before any talks take place.

The State Department said that response fell short.

Thursday could see Iran referred to the U.N. security council for sanctions. Traders fear sanctions against the country, which is the world's fourth largest oil exporter, would cause oil prices to skyrocket.

But many have said serious sanctions against the country remain unlikely, as veto-wielding China and Russia remain cool to the idea.

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