Price of oil plummets on U.S. supply data

| 12/22/2004

Crude oil prices dropped off sharply Wednesday, Dec. 22, after the U.S. Energy Department reported an unexpected rise in inventories.

Light, sweet crude for delivery in February plunged $1.52 a barrel to $44.24 at the close of trade on the New York Mercantile Exchange. Oil had traded as high as $45.95 a barrel in the moments before the inventory report.

Stockpiles of distillate fuels, which include heating oil, diesel and jet fuel, grew by 600,000 barrels to 119.9 million last week, compared with the median of analysts’ predictions that supplies would tumble 1.13 million, Bloomberg News reported.

Crude oil imports increased 1.7 percent to 10.6 million barrels a day. Forecasts of above average temperatures in the Northeast may slow demand for heating oil.

“It was a bearish report, and the market just collapsed,” Ed Silliere, a spokesman with Energy Merchant LLC in New York, told Bloomberg. The increase “came as a shock because of the high level of imports.”

Crude oil inventories grew by 2.1 million barrels to 295.9 million, the highest since July. Analysts had predicted a dip of 800,000 barrels.