Crude Oil Price Plunges As Supplies Rise

By Bloomberg, AP and Staff Reports

The price of oil fell by almost $2 a barrel Wednesday after OPEC warned of weakening energy demand and the U.S. government confirmed what most traders had already assumed: Domestic supplies of oil and fuels are rising.

Crude futures have plunged more than $4 this week, settling below $58 a barrel for the first time in nearly two months.

“So far the downtrend is not showing any signs of stopping,” said Tom Bentz, an oil broker at BNP Paribas Commodity Futures in New York.

Light sweet crude for March delivery declined by $1.92 to $57.65 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for the front-month futures contract since Dec. 19 but still more than 20 percent higher than a year ago.

By Wednesday evening in Tulsa, many gasoline retailers had dropped their price for regular fuel by 3 cents to $2.06 a gallon. The prevalent price a month ago was $2.19.

In its weekly supply report, the U.S. Energy Department said crude oil inventories grew last week by 4.9 million barrels to 325.6 million barrels, or 11 percent higher than a year ago. Gasoline inventories increased by 2.2 million barrels to 225.5 million barrels, or 2 percent above year-ago levels. The supply of distillate fuel, which includes diesel and heating oil, rose by 900,000 barrels to 136.9 million barrels, or 14 percent more than last year.

The Organization of Petroleum Exporting Countries forecast Wednesday that crude oil demand will grow at a slower pace this year as uncertainties remain over economic growth in the United States and Asia.