NEW YORK (Reuters) - Oil prices dropped to 22-month lows on Wednesday as U.S. inventories rose and demand weakened due to the global economic slowdown.
U.S. crude settled down 77 cents at $53.62 a barrel, the lowest settle since January 22, 2007. Earlier, prices had risen slightly on forecasts for colder weather in the United States.
London Brent fell 12 cents to settle at $51.72 a barrel, the lowest settle since May 31, 2005.
Temperatures in the U.S. Northeast — the world’s biggest heating oil market — are expected to average below normal from Thursday through Monday, according to private forecaster DTN Meteorlogix.
“The cold weather is supportive for heating oil futures, and also keeping crude from falling deeper,” said Mark Waggoner, president of Excel Futures.
“But the EIA data was overall bearish and we are still in a downtrend here.”
Crude oil inventories rose 1.6 million barrels last week, twice analysts expectations, according to data from the U.S. Energy Information Administration. U.S. distillate stocks fell by 1.5 million barrels, however, compared with forecasts for a build.
Total product demand fell by 7 percent against year-ago levels, the EIA reported, as the growing economic crisis continued to cut consumption.
U.S. prices dropped at a record pace in October, according to data released on Wednesday, while global economies wrestled with what the European Central Bank chief termed the globe’s worst financial crisis since World War Two.
On Wall Street, U.S. stock prices slid as dimming hopes for a rescue of the U.S. auto industry added to concerns about the deepening economic downturn.
Oil prices have tumbled from a record over $147 a barrel in July as demand in big consumer nations slows, spurring some members of the Organization of Petroleum Exporting Countries (OPEC) to call for further production cuts.
OPEC in October agreed to reduce supplies by 1.5 million barrels per day to help counter the price drop.
Oil ministers from the Organization of the Petroleum Exporting Countries gather for informal talks on a further oil supply cut in Cairo on November 29 and are scheduled to meet again on December 17 in Oran, Algeria.
Reporting by Matthew Robinson, Gene Ramos, and Robert Gibbons in New York: Ikudo Kao in London; Annika Breidthardt in Singapore; Editing by David Gregorio