Investing.com -- Oil prices fell sharply on Wednesday after U.S. data indicated that oil supplies nationwide reached the highest level ever, aggravating concerns that an even steeper drop could be imminent.
On the New York Mercantile Exchange, WTI crude oil for April delivery fell 1.46% or 0.74 to $49.78 a barrel in U.S. afternoon trading.
The U.S. Energy Information Administration (EIA) said in its weekly report that crude oil inventories rose by 10.3 million barrels for the week that ended Feb. 26, marking the largest weekly increase since 2002. Weekly inventory increases have been the norm of late. A week earlier, U.S. crude oil inventories rose by 8.4 million barrels for the week that ended Feb. 19 – more than doubling forecasts of a 4.0 million weekly increase.
At the Cushing Oil Hub in Oklahoma, inventory levels have reached 49.2 million barrels, a 53% increase from the weekly level at this time last year. The current level at the nation's largest hub for WTI crude oil is only 2.5 million barrels below the storage facility's all-time record high. It has been estimated by analysts that Cushing could reach full capacity as early as next month – raising fears that WTI crude could drop to as low as $20 a barrel.
Meanwhile, brent oil prices for April delivery on Wednesday dropped 2.25% or 1.37 points to $59.65 a barrel. The mid-week slide underscored a period of recent volatility where daily oil prices have moved more than 2% in an up or down direction in 27 of the last 40 trading days.
The spread between brent and WTI crude in afternoon trading hovered in between $9.76 and $9.87 a barrel. Earlier on Monday, the spread reached $13 a barrel.
ExxonMobil CEO Rex Tillerson said Wednesday at the company's annual investor conference that he expects oil prices to remain low for the next two years because of large global supply. ExxonMobil has lowered its long-term production guidance forecast to a 2-year outlook because of long-term instability.
Elsewhere, natural gas futures for April delivery were up 1.99% or 0.055 to 2.768 per MMBtu, marking its fifth daily increase in the last 10 days.