Oil prices pulled back sharply today after a report indicated that the high price of oil and gasoline are depressing demand for petroleum products.

According to AP: “Light, sweet crude for April delivery fell $4.41 to $105.01 a barrel on the New York Mercantile Exchange, extending a decline that began before the report was released.”

Overall consumption of oil and refined products fell by 3.2 percent over the last four weeks compared to the same period last year, according to the US Energy Information Administration — a strong indication that high gas-pump prices are curtailing demand.

“The soaring price of oil is causing something funny to happen to the world’s oil supply,” says Matt Badiali in DailyWealth.

“Oil-producing countries like Ecuador, Venezuela, Russia, and Nigeria sit on unbelievable stores of wealth… and they’re not keen on sharing it with anyone… especially a Western oil company.

“Companies like ConocoPhillips and ExxonMobil are forced into less promising areas… which drives up production costs… which drives up oil prices. I recently read a report that claimed oil producers must now spend twice the money for one-third less production than they did six years ago. These diminishing returns are hard on shareholders.”