NEW YORK - Oil’s rise to $100 a barrel, which seemed a done deal as recently as two days ago, was dealt a severe blow Wednesday when the government reported an increase in supplies at the Nymex delivery terminal in Cushing, Okla., which is closely watched by traders as a benchmark of oil inventory tightness.
Anemic growth in demand and a jump in refinery activity also weighed on prices, which have dropped sharply in recent days on concerns about the economy and expectations supplies will grow.
“The report … added to the bearish sentiment in the market,” said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. “It comes at a period in time when OPEC is boosting production … and considering another increase in production.”
Light, sweet crude for January delivery plunged $3.80 to settle at $90.62 a barrel on the New York Mercantile Exchange following Tuesday’s drop of $3.28 a barrel.
That was crude’s second largest two-day price decline since the Nymex introduced a futures contract in 1983. On Oct. 19 and 22, 1990, crude prices dropped $8.42.
The latest price is $8.67, or 8.7 percent, below the record price of $99.29 set last week.
While analysts caution that futures could still rebound and again threaten to reach $100 this year, most feel that’s becoming less likely. Many market observers have long argued that prices were driven higher by speculators and have predicted that futures would fall sharply at some point.
At the pump, meanwhile, gas prices rose 0.5 cent overnight to a national average of $3.096 a gallon.