Oil prices continued to fall Wednesday after Energy Information Agency (EIA) reported a smaller- than-expected drop in U.S. oil supplies of last week. The EIA said U.S. crude supplies shrank 1.3 million barrels to 363.3 million barrels for the week ended Aug 2. Analysts expected a drop of 2 million barrels. Gasoline supplies rose 100,000 barrels to 223.6 million barrels. Analysts expected a decrease of 1 million barrels. U.S. refineries operated at 90.9 percent of their total capacity. The increase of U.S. oil output also weighed on oil prices. The EIA reported Tuesday in its short-term energy outlook (STEO) that U.S. crude oil production increased to an average of 7.5 million barrels per day (bbl/d) in July 2013, the highest monthly level of production since 1991. The EIA forecasts U.S. total crude oil production will average 7.4 million bbl/d in 2013 and 8.2 million bbl/d in 2014, both about 0.1 million bbl/d higher than the estimate in last month\'s STEO. On the economic front, U.S. mortgage applications increased 0.2 percent from a week earlier, according to the Mortgage Bankers Association\'s Weekly Mortgage Applications Survey for the week ended Aug. 2. Light, sweet crude for September delivery lost 0.93 U.S. dollar to settle at 104.37 dollars a barrel on the New York Mercantile Exchange. Brent for September delivery went down 74 cents to close at 107. 44 dollars a barrel.