Crude Oil Nears $35 a Barrel

Dismal economic news hastens the decline, despite a rise in inventories.
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Updated from 12:16 p.m. EST

Crude oil futures fell to almost $35 a barrel in trading Wednesday.

Light, sweet crude for February delivery fell $3.63 to $35.35 on the New York Mercantile Exchange. Prices had fallen as low as $35.13 earlier in the session.

The drop came following a fifth-straight drop in consumer spending and bleak news on the jobs front.

New claims for unemployment benefits rose more than expected last week, as layoffs spread throughout the economy. The Labor Department reported initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ending Dec. 20, from an upwardly revised figure of 556,000 the previous week.

That said, investors expecting more evidence of slowing U.S. energy demand got a bit of a surprise as the Energy Department reported crude inventories dropped last week.

For the week ended Dec. 19, crude inventories fell by 3.1 million barrels, or 1%, to 318.2 million barrels, which is 9.1% above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Gasoline inventories rose by 3.3 million barrels, or 1.6%, to 207.3 million barrels, which is 2.4% below year-ago levels. Analysts expected stockpiles of the motor fuel to rise by 900,000 barrels.

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