Surge in US crude supplies send oil prices to lowest level in six months

17-May-12

Oil prices dropped to six-month lows to hover around US$92 a barrel after release of data that showed U.S. crude supplies surged more than expected last week. The American Petroleum Institute reported a rise in crude inventories by 6.6 mln barrels last week. Inventories of gasoline fell 2.6 mln barrels last week while distillates tumbled 1.6 mln barrels. Brent crude for July delivery dropped to US$110.2 per barrel in London. Since the start of May, crude oil has plunged by over 12% amid investor concerns that the rate of global economic growth in 2012 will slow more than previously expected. U.S. crude inventories are at a 22-year high amid weak demand and growing production. Europe is already reeling near recession this year, and further political turmoil could hurt economic activity and demand for crude.