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Feds may tap oil reserve to ease gas prices

(CBS/AP) NEW YORK - A senior Obama administration official says the White House is considering a potential release of oil from the Strategic Petroleum Reserve.

The U.S. is monitoring gas prices to see whether they fall before making a decision, said the official, who requested anonymity because they were not authorized to speak publicly.

Gas prices in the U.S. have risen an average of 39 cents since early July, because of an increase in oil prices and refinery problems in some regions. In the past two weeks alone, the average U.S. price of a gallon of gasoline has increased 18 cents.

The Lundberg Survey of fuel prices recently put the average price for a gallon of regular at $3.69, about 8 cents higher than the same time last year. Nationally, a gallon of mid-grade averages $3.84 and premium $3.96.

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Benchmark crude is up 22 cents to $95.82 in midday trading in New York. It has gained three percent this week on positive economic data and a drop in U.S. oil supplies. It's up 23 percent since late June.

Brent crude, which is used to price international varieties, fell almost 2 percent.

Analysts said oil prices did an about-face after three days of gains following a Reuters report Friday that the White House is weighing whether to tap U.S. oil reserves.

"Overnight the trigger for the weakness was, potentially, news reports that the U.S. will consider releasing strategic petroleum reserves, and that seems to be weighing on the market," said Nick Trevethan, senior commodities strategist at ANZ Research in Singapore.

Oil analysts at Commerzbank suggested that the Obama administration might be looking for a way to keep oil prices from skyrocketing. Obama is running for re-election in a bruising presidential contest.

"In the past two months, U.S. gasoline prices have soared 20 percent on the back of higher oil prices and lower gasoline stock levels," the Commerzbank team said.

The Obama administration last considered opening up the Strategic Petroleum Reserve this spring, after surging oil prices pushed up prices at the pump. It opted against the plan when oil prices receded.

Releasing oil from the nation's emergency supplies can temporarily curb gas prices, although that price is mostly related to global changes in supply and demand for oil. The White House also may hope that its latest disclosure that the government is studying whether to draw on the reserves could help keep a lid on prices.

In other energy futures trading, gasoline was steady at $3.08 a gallon and heating oil was off 3 cents at $3.10 a gallon. Natural gas was steady at $2.724 per 1,000 cubic feet.