Oil futures fell Wednesday after the International Energy Agency cut its oil demand forecasts for this year due to the weakening U.S. economy. Expectations that domestic crude supplies rose last week also weighed on prices.The agency, an energy policy adviser to mostly Western industrialized nations, said world oil demand will grow by 1.7 million barrels a day this year, rather than by the 1.98 million barrels a day it forecast in January. Global consumption of crude oil is now expected to average 87.6 million barrels a day this year, up 1.9 percent from 2007 but down from the 2.3 percent increase the agency forecast in January. The lowered International Energy Agency forecast came one day after the Energy Department's Energy Information Administration cut its demand growth and price forecasts for this year, also citing the cooling economy.



"It is becoming clearer that in a slowing economy it will be difficult to maintain these lofty prices over the long run," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago in a research note.

Investors are also awaiting an EIA report Wednesday that was expected to show crude oil and gasoline inventories rose last week.

Light, sweet crude for March delivery fell 33 cents to $92.45 a barrel on the New York Mercantile Exchange.

Traders shrugged off Venezuela's halt of crude sales to Exxon Mobil Corp. The state-run Petroleos de Venezuela SA, or PDVSA, said Tuesday it stopped crude sales to the world's biggest oil company in response to Exxon Mobil's court bid to freeze billions of dollars in Venezuelan assets.

Exxon Mobil is challenging the nationalization of its Venezuelan oil ventures. President Hugo Chavez has threatened to cut off all supply to the United States.

"Most market participants, including myself, don't think that Hugo Chavez will actually go through with his threat of halting crude sales to the U.S.," said Victor Shum, an analyst with Purvin & Gertz in Singapore. "The amount they sell to the U.S. is about half of what Venezuela produces in total, and at today's high prices, that represents a lot of revenue."

At the pump, meanwhile, gas prices rose 1.1 cent overnight to a national average of $2.972 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, are responding to a slight bounce in the oil market. Crude futures rose more than $6 between Thursday and Monday on concerns about overseas supply disruptions.

Other energy futures were mixed Wednesday. March heating oil futures rose 0.74 cent to $2.5985 a gallon on the Nymex, while March gasoline futures fell 0.96 cent to $2.3584 a gallon. March natural gas futures slipped 3.4 cents to $8.402 per 1,000 cubic feet.

In London, Brent crude futures for March delivery were unchanged at $92.86 a barrel on the ICE Futures exchange.

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AP Business Writer Toby Anderson in London and Associated Press Writer Gillian Wong in Singapore contributed to this report.