Oil prices fall below $78
Weekly inventory report shows gas stocks rose more than expected, by 1.7 million barrels last week.
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NEW YORK (Reuters) -- Oil fell more than 2% Wednesday on worries about demand in the world's largest fuel consumer after data showed a surprise build in U.S. gasoline inventories and weak U.S. new home sales.
U.S. crude oil inventories rose less than expected last week as imports increased, but gasoline stockpiles logged an unexpected gain of 1.7 million barrels, according to data from the U.S. Energy Information Administration.
"Crude stocks were only up 800,000 but the surprise was gasoline stocks. I think that's what is keeping the market down," said Dan Flynn, analyst at PFGBEST Research in Chicago.
U.S. crude fell $2.09, or 2.63%, and settled at $77.46 a barrel.
Oil prices came under pressure after data showed sales of new U.S. homes tumbled unexpectedly in September, the first drop in six months, feeding doubt about an economic recovery.
Oil markets have been watching equities and economic data for signs of a rebound that could lift flagging fuel demand.
U.S. and European equity markets fell after the housing sales data. The U.S. dollar rose on safe-haven demand.
Weaker crude oil prices and slumping margins at refineries knocked quarterly earnings lower at ConocoPhillips (COP, Fortune 500), PetroChina (PCCYF) and Hess Corp., (HES, Fortune 500) all of which reported earnings on Wednesday. 
