NEW YORK (AP) — Oil futures prices fell sharply from a record near $115 a barrel yesterday as investors absorbed a US government report that showed gasoline demand continues to decline.

Investors, who initially bought frenetically on news that crude oil gasoline supplies had fallen more than expected last week, turned around and began selling when they realised US appetite for increasingly expensive gas is declining.

The Energy Department's Energy Information Administration said inventories of gasoline fell by 5.5 million barrels, much more than 1.7 million barrel drop analysts surveyed by Dow Jones Newswires had expected. But the EIA report also showed gasoline demand has fallen an average of one percent each of the last four weeks compared to the same period last year.

Prices were also pressured by the EIA's report that inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.

Light, sweet crude for May delivery fell $1.16 to $112.63 a barrel on the New York Mercantile Exchange by midday after rising to a trading record of $114.95 shortly after the EIA report was issued. The report said crude inventories fell by 2.3 million barrels last week, compared to the gain analysts expected.

Gasoline futures were fluctuating; the May contract fell 0.12 cent to $2.8798 a gallon on the Nymex after earlier rising to a trading record of $2.933. May heating oil futures fell 4.87 to $3.2252 a gallon.

"Products are what's really driving the market right now," Mike Zarembski, senior commodity analyst at brokerage optionsXpress Inc. in Chicago, told Dow Jones Newswires.

The inventory numbers come as the dollar continued to drop against other major currencies, a weakness that has fueled crude oil's gains over the past few weeks as investors seek a hedge against the weakening US currency.

The dollar's fall had sent oil spiralling higher in electronic trading earlier.