Oil Update: Crude Settles Closer to $59

Is it time to start talking about $50 to $55 oil?

Crude continued its steep drop today as the U.S. Energy Department's most recent weekly inventory data showed continued sluggish demand for energy products.

The Energy Information Administration reported that crude stocks fell only 2.9 million barrels to come to 347.3 million barrels for the week ended July 3. According to a Platts survey, oil watchers anticipated a much steeper 3.2 million barrel fall.

More eye-popping was the swelling of gasoline stocks, which jumped a surprising 1.9 million barrels last week. Distillate fuel inventories also grew by a more-than-expected 3.7 million barrels.

Light, sweet crude for August delivery plummeted below $61 and almost touched the high-$59 area after the announcement, losing $2.79 to settle at $60.14 per barrel on the New York Mercantile Exchange. For those with short memories, remember that oil was topping $73 just last week.

After the announcement, shares of ConocoPhillips(COP Quote) and Marathon Oil(MRO Quote) were falling 2.5% and 2.1% in the afternoon.

Exxon Mobil(XOM Quote) was losing nearly 1%.

Hess(HES Quote), which finished yesterday in positive territory, was down 2.3% today.