Oil futures tumbled 12 percent, the most in more than seven years, after a U.S. government report showed a bigger-than-expected increase in supplies of crude oil, gasoline and distillate fuel as demand dropped, Bloomberg reported.
Inventories of crude oil rose 6.68 million barrels to 325.4 million barrels last week, the highest since May, the Energy Department said today in a weekly report. Supplies were forecast to increase by 800,000 barrels, according to the median of forecasts by 14 analysts in a Bloomberg News survey.
"We have the making of a huge glut here," said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. "Supplies are more than adequate and should continue to rise because demand is so poor."
Crude oil for February delivery fell $5.84, or 12 percent, to $42.74 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are heading for the biggest one-day decline since Sept. 24, 2001. Futures are down 55 percent from a year ago.
Inventories at Cushing, Oklahoma, where oil that's traded on Nymex is stored, climbed 14 percent to 32.2 million barrels last week, the highest since at least April 2004, when the department began keeping track of supplies there.
"We're pushing up toward capacity limits," said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York. "There's still a bit of space, but not much."
