Oil prices are falling after the government reported that the nation's fuel supplies grew more than expected last week and that gasoline demand fell sharply.Light, sweet crude for July delivery is down $1.17 at $123.14 a barrel on the New York Mercantile Exchange. Earlier, prices briefly dipped below $123. Nearly two weeks ago, they crossed $135 for the first time. The Energy Department says gas inventories rose by 2.9 million barrels last week, more than three times what the market expected. Meanwhile, demand for gas fell by 1.4 percent over the last four weeks.

Inventories of distillates, which include diesel and heating oil, rose by 2.3 million barrels. Investors shrugged off an unexpected decrease in crude oil inventories.

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