Oil drops to lowest level since June

The price of oil dropped to the lowest level since early June as the United States (US) government reported the tenth straight weekly increase in crude oil supplies.

Benchmark US crude for January delivery was down US$1.53 at US$92.16 a barrel on the New York Mercantile Exchange around midday Wednesday, after dropping to US$92.04 earlier. Trading volumes were low ahead of Thursday's Thanksgiving holiday in the US.

Oil has declined from around US$104 in early October due to a muted outlook for demand, high supplies, and reduced tensions in the oil-rich Middle East.

Crude supplies increased by three million barrels, or 0.8 per cent, in the week ended November 22, the Energy Department said Wednesday. The nation's supply of crude oil is now 391.4 million barrels, which is 4.6 per cent above year-ago levels and "well above the upper limit of the average range for this time of year", the report said.

Brent crude, a benchmark for international oils, was down 24 cents at US$111.64 a barrel on the ICE exchange in London. Brent's rise and widening spread to the Nymex contract was attributed to new disruptions of oil exports from Libya, a key supplier to European markets.