Oil prices fell again this evening as a US government report showed larger than expected increases in reserves of petrol and distillates.

The US Energy Information Administration (EIA) said petrol stocks rose by 2.9 million barrels last week - a much bigger rise than expected. Stocks of distillates, which include diesel, rose by 2.4 million barrels when they had been forecast to rise by 2.3 million barrels.

US crude fell $1.78 to $126.64, while Brent crude was $1.95 lower at $127.60.

The increase in refined products stockpiles in the US, the world's biggest energy consumer, overshadowed a larger than expected decline in crude oil stocks, which fell by 1.6 million barrels.

Earlier in the session, oil fell as concern eased that Hurricane Dolly would hit Gulf of Mexico crude supply.