U.S. crude drops 5.5 percent on supply glut

NEW YORK (Reuters) – U.S. oil prices fell 5.5 percent on Thursday to settle at the lowest point in nearly two months, dragged down by swelling crude stocks in the United States and concerns over the health of the global economy.

U.S. crude dropped $1.96 to settle at $33.98 a barrel, the lowest since December 19 and extending a losing streak that has clipped 17 percent off the price in five days. Brent crude rose 37 cents to $44.65 a barrel.

U.S. crude has been running at a big discount to Brent due to a glut at the main U.S. storage hub in Oklahoma along with supply problems in Nigeria that tend to have a bigger impact on European supplies.

The losses came after the U.S. government reported on Wednesday a seventh straight weekly increase in nationwide crude inventories as the economic crisis crushes business and consumer fuel demand.

Crude oil stockpiles at Cushing, Oklahoma — the world’s biggest storage hub and the delivery point for U.S. crude futures — rose last week to record levels around 35 million barrels, near operational capacity.

Reuters