Investing.com -- Crude Oil prices fell sharply on Thursday erasing all of February's gains as the price approaches a 52-week low.
On the New York Mercantile Exchange, crude oil for April delivery fell 5.57% or 2.84 to $48.15 a barrel in afternoon trading. With one trading day left in the month of February, the price of WTI Crude nears a 52-week low of $44.37.
The precipitous drop in crude on Thursday came one day after the Energy Information Administration (EIA) said in its weekly report that U.S. crude oil inventories rose by 8.4 million barrels last week. The increase more than doubled its forecasts of a 4.0 million barrel weekly spike. In Cushing, Oklahoma, storage increased from 46.3 million barrels to 48.7 million -- the highest level in over a year.
Oil prices often weaken when the U.S. dollar becomes stronger, as the dollar-denominated commodity becomes more costly for holders of other currencies.
The dollar index, which measures the greenback's strength against a basket of six other major currencies, rose 1.12 points or 1.20% to reach a three-week high of 95.37 during midday trading.
The dollar strengthened amid the release of mixed U.S. data on Thursday. The Consumer Price Index (CPI) fell 0.7% in January, above estimates of a 0.6% decline. The drop in inflation was the largest decline since December, 2008. The CPI, which slipped 0.3 percent in December, experienced a decline for the third straight month.
On Wednesday, crude oil rose above $50 a barrel as Saudi Arabia oil minister Ali al-Naimi told reporters that oil markets had settled down after a prolonged period of volatility. Naimi's reassuring comments on global oil demand outweighed the negative data.
On the Intercontinental Exchange (ICE) Thursday, brent crude for April delivery fell 1.78% or 1.10 points to $60.53 a barrel. The drop reversed a previous gain on Wednesday when brent neared $62 a barrel.
Elsewhere, domestic gasoline prices plunged 18.7% in January -- the biggest drop since December of 2008. Gasoline prices have declined for seven straight months. In December, gas prices fell 9.2 percent.