West Texas Intermediate was trading at $40.70 nearing midday in New York, down by almost five per cent from Tuesday's close.
That's the lowest level that oil has traded at since the spring of 2009, when oil was on its way back up after troughing at $33.98 on Feb. 12 of that year.
The sell-off began after data from the U.S. government showed oil inventories rose much more than expected last week. The Energy Information Administration said Wednesday that America now has 456.2 million barrels of oil in storage, close to a record high. The figure was 2.62 million barrels higher than it was the previous week, and disappointing to economists who had been expecting a decline of 820,000 barrels.
The Canadian dollar, which is closely tied to the price of oil, sold off on the news, trading below the 76-cent US level.
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