Oil tumbles to lowest levels of 2010

Crude oil futures plunged to their lowest levels of the year Wednesday after the US government reported that supplies grew more than expected.

The Energy Information Administration said that the United States' oil stockpiles swelled by 3.7 million barrels last week, well above the average for this time of year. Gasolene supplies grew by 3.8 million barrels.

The US demand for petroleum products also fell by nearly one percentage point from last year, showing the country has an even smaller appetite for energy now than when it was in recession.

Benchmark crude for February delivery gave up $1.14 to settle at US$79.65 a barrel on the New York Mercantile Exchange. Crude fell as low as US$78.37 earlier in the day.

Oil prices had been surging all month, rising to a 15-month high near US$84 a barrel as a bitter chill swept across parts of the US, Europe and Asia. China also said last week that it increased oil imports by nearly 14 per cent in 2009, fuelling expectations that world oil demand will continue to grow.

The rally in crude has tugged retail gas prices higher every day since Christmas. Pump prices increased again overnight by less than a penny to a new US average of US$2.757 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of regular unleaded is nearly one dollar more expensive than a year ago.

In other Nymex trading in February contracts, heating oil fell 3.72 cents to settle at US$2.0946 a gallon and gasolene dropped 3.76 cents to settle at US$2.0602 a gallon. Natural gas futures added 14.2 cents to settle at US$5.733 per 1,000 cubic feet.

- AP