By The Associated Press
NEW YORK (AP) â¿¿ The price of oil dropped more than 2 percent Wednesday, following disappointing economic news from the world's two biggest oil-consuming nations and a large increase in U.S. crude supplies.
Benchmark oil for June delivery fell $2.43, or 2.6 percent, to finish at $91.03 a barrel on the New York Mercantile Exchange.
Data from China and the U.S. pointed to weaker demand for oil. The manufacturing sector in both countries grew at a slower pace in April, according to data from industry groups. Construction spending in the U.S. also fell. And payroll processor ADP said that private employers in the U.S. added just 119,000 jobs last month, below analyst estimates.
While the market was digesting the economic news, the Energy Department said U.S. crude inventories expanded by 6.7 million barrels last week, nearly five times the increase analysts expected. At 395.3 million barrels, supplies are the highest since 1982, when the government began tracking inventories. The nation's oil production, at 7.3 million barrels per day, is the highest it's been in 20 years. Imports of foreign crude increased last week, adding to bulging supplies.
Oil has dropped $3.47 a barrel, or 3.7 percent in two days, after gaining $5 last week. Analysts doubted whether economic conditions supported higher priced and "broad-based macro concerns were reinforced by disappointing manufacturing data out of both the U.S. and China" on Wednesday, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
Late in the trading session, the Federal Reserve said it will maintain its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent. Oil inched back above $91 after the Fed issued its latest policy update. It was as low as $90.11 at one point in the trading session.