Crude Oil Plunges To End Below $61 On Supply Glut, Waning Demand

(RTTNews) - U.S. crude oil plunged to new depths on Wednesday, after a report from the Energy Information Administration showed crude stockpiles in the U.S. to have declined more than expected last week, even as the Organization of Petroleum Exporting Countries slashed its global demand outlook.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have increased by 1.5 million barrels in the week ended December 5, while analysts expected a decline of 2.5 million barrels. The report showed U.S. crude oil inventories at 380.8 million barrels, end last week.

Gasoline stocks jumped by 8.2 million barrels last week, while analysts anticipated a gain of 2.6 million barrels. Inventories of distillate, including heating fuel, increased 5.6 million barrels last week.

Industry data from the American Petroleum Institute said Tuesday that crude inventories in the U.S. jumped 4.4 million barrels last week.

Meanwhile, OPEC slashed its forecast for crude oil demand in 2015 to the lowest in 12 years. The cartel lowered its demand projection for 2015 by about 300,000 barrels a day, to 28.9 million a day.

Going by the current trend, analysts at Bank of America believes the OPEC is on the verge of dissolving and oil prices would likely slide to $50 a barrel.

Recent reports indicate producers of massive quantities of oil such as Saudi Arabia will be content to drive away competition from alternative fuels and cripple smaller oil producing countries with low prices.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, plummeted $0.77 or 4.5 percent to close at $60.94 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for January delivery scaled a high of $63.43 a barrel intraday and a low of $60.43.

On Tuesday, crude oil futures ended at at $63.82 a barrel, up $0.77 or 1.2 percent, as the dollar weakened against some major currencies with global equity markets declining on developments in Greece and China tightening rules on short-term loans.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 88.28 on Wednesday, down from its previous close of 88.66 late Tuesday in North American trade. The dollar scaled a high of 88.81 intraday and a low of 88.26.

The euro trended higher against the dollar at $1.2441 on Wednesday, as compared to its previous close of $1.2375 late Tuesday in North American trade. The euro scaled a high of $1.2447 intraday and a low of $1.2363.

In economic news, inflation in China dropped to 1.4 percent in November, a five-year low, from 1.6 percent in October, the National Bureau of Statistics said Wednesday. It was forecast to remain unchanged at 1.6 percent.

Producer prices declined 2.7 percent in November from last year, which was faster than a 2.2 percent fall seen in October and the 2.4 percent drop forecast by economists.

Elsewhere in Asia, consumer confidence in Japan dropped unexpectedly in November, data from the Cabinet Office showed Wednesday. The consumer confidence index dropped to 37.7 in November from 38.9 in the previous month. Economists had forecast the index to rise to 39.5.

From Europe, the U.K. visible trade deficit narrowed to a seven-month low in October, due mainly to a fall in fuel imports, the Office for National Statistics said Wednesday. The visible trade gap fell to GBP 9.6 billion, the lowest since March, from GBP 10.5 billion in September. It was expected to decrease to GBP 9.5 billion.

Meanwhile, the British Chambers of Commerce downgraded the growth outlook for the U.K. citing slower than expected growth in services, household consumption and exports. The business lobby lowered its 2014 growth forecast to 3 percent from 3.2 percent and the forecast for 2015 was downgraded to 2.6 percent from 2.8 percent.