Oil ended at $91.98 on Wednesday, dropping $3.31, or 3.5 per cent. That was its lowest close since Aug. 3. Oil has fallen seven per cent this week.
Several things have been pushing prices down. Analysts said traders are taking profits after oil got above $100 per barrel on Friday for the first time since May. And there have more signs this week that the global economy is slowing down, which tends to push oil prices lower because people and businesses use less energy.
Also, crude inventories rose three times more than analysts had expected last week. Crude supplies grew by 8.5 million barrels to 367.6 million barrels. That's 8.4 per cent higher than at the same time last year, according to the Energy Information Administration's weekly report.
Analysts expected a rise of 2.5 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
There were also reports that Saudi Arabia is keeping production high to drive oil prices lower.
Oil's decline came despite some news that might have pushed prices higher. The Bank of Japan said on Wednesday that it would buy more government bonds, which is intended to boost Japan's economy. And ongoing tensions in the Middle East have tended to drive prices higher.
"Yet we continue to fall," said Addison Armstrong, senior director for market research at Tradition Energy. "I think that has accelerated some profit-taking. After all, crude did have a pretty good run from $86 up to $100."
Brent crude traded on the ICE Futures exchange in London fell $3.84, or 3.4 per cent, to $108.19 per barrel.
Traders were also keeping their eyes on oil supplies as U.S. Gulf Coast refineries returned to production after shutting down due to Hurricane Isaac.
"We're getting back a few more refineries post (Hurricane Isaac), but on the flip side a few refineries had some restart issues and a few are headed into maintenance," said Carl Larry of Oil Outlooks and Opinions in a newsletter.
Regular gasoline at the pump in the U.S. fell a half a penny to an average of $3.854 per gallon.
In other futures trading in New York:
— Wholesale gasoline fell seven cents $2.829 per gallon.
— Heating oil slipped 8.3 cents to $3.044 per gallon.
— Natural gas fell a penny to $2.762 per 1,000 cubic feet.
Associated Press writers Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.
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