Investing.com - Crude oil futures plunged a six-week low during U.S. morning hours on Wednesday, adding to heavy losses after a U.S. government report showed oil supplies rose significantly more-than-expected last week.
Prices came under further pressure amid signs that top oil exporter Saudi Arabia was pumping more oil. The country’s output is near the highest level in more than three decades, according to a Persian Gulf official with knowledge.
On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD93.12 a barrel during U.S. morning trade, tumbling 2.7%.
Earlier in the session prices fell by as much as 3.2% to trade at a daily low of USD92.55 a barrel, the weakest level since August 10. Prices traded at USD92.76 a barrel prior to the release of the EIA data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 8.5 million barrels in the week ended September 14, surging past expectations for a 1.0 million barrel increase.
Total U.S. crude oil inventories stood at 367.6 million barrels as of last week.
Total motor gasoline inventories decreased by 1.4 million barrels, compared to expectations for a gain of 1.2 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil prices came under heavy selling pressure earlier in the day, losing nearly USD2 per barrel in a matter of minutes after the Turkish energy minister said he was in talks with Libya, Saudi Arabia and Russia about making up for the shortfall in Iranian oil imports.
Recent comments from Saudi Arabia saying that the Kingdom was likely to keep output high in an effort to lower prices further weighed on the energy complex.
Analysts said that the market is now balancing Saudi assurances that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran amid tighter Western sanctions on Tehran over its disputed nuclear program.
Meanwhile, concerns over the handling of the euro zone’s sovereign debt crisis continued to weigh on market sentiment.
Dow Jones Newswires reported earlier that some German lawmakers are seeking to water down proposals for a European banking union and supervision of euro zone banks by the European Central Bank.
Investors also remained jittery amid reports Spanish Prime Minister Mariano Rajoy is uncertain about asking for help from the European Central Bank's new bond-purchasing program, which would mean signing up to a permanent bailout fund.
Oil futures were higher during the Asian trading session, rising to a daily high of USD96.50 a barrel, as appetite for riskier assets strengthened following the Bank of Japan’s surprise decision to boost the size of its asset-purchase program by JPY10 trillion to a total of JPY80 trillion, in an effort to stimulate slowing economic activity and to counter the strengthening yen.
The BoJ move followed the Federal Reserve's QE3 stimulus program announced last week and the European Central Bank earlier this month adopting a bond-buying scheme to lower borrowing costs in troubled euro zone countries seeking aid.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery dropped 2.55% to trade at USD109.17 a barrel, with the spread between the Brent and crude contracts standing at USD16.05 a barrel.