NEW YORK (CNNMoney.com) -- Oil prices seesawed Wednesday after government said supplies of crude showed a big decrease, refining activity fell, and gasoline stocks slid unexpectedly.
U.S. light crude for September delivery fell 42 cents to $72 a barrel on the New York Mercantile Exchange. Oil had traded down 6 cents just prior to the report's release, and gained as much as 78 cents immediately after the report.
In its weekly inventory report, the Energy Information Administration said crude stocks fell by 4.1 million barrels last week. Analysts were looking for a drop of 2.7 million barrels, according to Reuters.
Gasoline stocks posted a surprise decline, falling by 1.7 million barrels. Analysts were looking for a 900,000 barrel gain.
Refining activity dropped for the first time in several weeks.
The EIA report said refiners operated at 91.3 percent capacity, down nearly 2 percentage points from last week. Analysts were looking for a small increase in refinery activity.
Traders seemed to focus on the drop in refining activity.
"The refinery problems are not over," Ray Carbone, a broker and trader at Paramount Options, said from the NYMEX floor. "If there is any kind of problem, like a hurricane, gas will skyrocket."
Reformulated gasoline futures gained 3 cents a gallon on NYMEX, but are still down nearly 20 percent from highs reached in May.
EIA said distillates, used to make heating oil and diesel fuel, rose by 1 million barrels, less than the 1.8 million barrel increase expected.
But gasoline demand may be acting to push prices lower. EIA said gasoline demand over the last four weeks rose 0.8 percent, quite a bit lower than the normal average increase in demand of 1.5 percent.
Oil prices have fallen about 7 percent from a record trading high of $78.77 set last week. Crude was unable to advance further in the face of falling prices for refined products, as refineries finally returned from prolonged maintenance and made big additions to stocks of gasoline and heating fuel for the last several weeks.
Volatile stock markets, shaken by bankruptcies in the subprime lending sector, have also raised concerns over economic growth and demand for oil, further pushing down the price of crude.
OPEC holds firm
Comments from an Organization of Petroleum Exporting Countries minister that the cartel does not need to boost output when it meets Sept. 11 may also be supporting prices.
The comments, quoted by Reuters, are the latest indication that OPEC, source of more than a third of the world's oil, is holding firm in the face of calls from the United States and the International Energy Agency for higher oil output.
"As the market stands today, I don't see any increase in production needed," said the delegate, who declined to be identified by name. "We believe the market is well supplied."
The delegate said he expected prices to ease further from the record high of $78.77 a barrel reached on Aug. 1 as factors unrelated to supply and demand, such as speculation and "consumer anxieties," had pushed prices up.
"We see the price easing in coming days. I don't see any reason prices should be at this level," he told the news agency.
OPEC decided last year to lower output by 1.7 million bpd to bolster prices.
- from staff and wire reports 
