Higher US crude supplies push prices down

A report about a large increase in US crude supplies has pushed oil prices down in the global market.

American oil, West Texas Intermediate, for February delivery decreased by USD 1.28 to USD 55.84 a barrel on the New York Mercantile Exchange during Wednesday trading.

Brent oil, the European benchmark, also dropped USD 1.70 to USD 59.99 a barrel in London.

Wednesday’s plunges came following the release of a US Department of Energy inventory report that showed oil stocks grew by 7.3 million barrels.

“The inventory report this week seems to have reawakened the market’s fears of tepid fuel demand and excess supply,” said Gene McGillian, broker and analyst at Tradition Energy.

“In the US, we have a lot of oil around, and I don’t really see any evidence that this crater in prices has boosted demand significantly yet,” he said.

Oil prices have plunged about 50 percent since June on mounting supplies by certain countries such as Saudi Arabia and lackluster global economic growth.

On Tuesday, Saudi Arabia said that the Organization of the Petroleum Exporting Countries (OPEC) will not cut oil production even if the price falls to USD 20 a barrel.

“Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” Oil Minister Ali al-Naimi told weekly magazine the Middle East Economic Survey (MEES).

The minister defended a decision made last month by OPEC, whose lead producer is Saudi Arabia, to continue a daily production cap of 30 million barrels.