Oil slumps on US crude inventory surge
Oil prices plunged on Wednesday, ending a four-day rally, after the United States government reported that crude inventories surged last week.
The 6.3 million barrel increase was far more than analysts had expected and renewed worries in the market that supplies of oil are still outstripping demand.
Oil had rallied 19 per cent over the previous four days as traders hoped that low prices would force more energy companies to curtail exploration and production.
U.S. benchmark crude dropped US$4.60, or 8.7 per cent, to settle Wednesday at US$48.45 a barrel in New York.
The price of oil reached its highest point of the year Tuesday, leading to speculation that a long-running collapse was abating. The price has been falling sharply since last June, when it peaked at US$107 a barrel.
Brent crude, a benchmark for international oils used by many US refineries, declined US$3.75, or 6.5 per cent, to close at US$54.16 a barrel in London.
In other futures trading on the NYMEX, wholesale gasoline fell 12 cents to US$1.482 a gallon; heating oil fell 8 cents to close at US$1.767 a gallon; and natural gas fell 9.2 cents to close at US$2.662 per 1,000 cubic feet.
Oil had risen since Friday to reach US$51.17 a barrel on Tuesday in New York, while Brent crude had risen to US$56.18 a barrel.
The gains began with a report showing a sharp drop in the number of rigs in the US drilling for oil. On Monday, BP announced a 20 per cent drop in capital spending for this year. That followed Chevron's projected cut of 13 per cent.