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Crude futures prices fell sharply Wednesday, falling below $54 a barrel
Crude futures prices fell sharply Wednesday, falling below $54 a barrel, as traders shelved concerns about tight winter-fuel supplies and focused on government data showing faster-than-expected growth in U.S. oil inventories. "The market looks like it's ready to fall hard and fast," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. Oil prices initially rose after the Energy Department reported a steep decline in U.S. inventories of distillate, which includes heating oil. But Silliere said the market had already priced in the six-week decline in heating oil supplies and was now anticipating that the refining industry would sharply boost production ahead of the Northern Hemisphere winter, informs Forbes. Crude for December delivery was down $1.52 to $53.65 a barrel on the New York Mercantile Exchange. The record settlement price of $55.17 was reached Friday and matched Tuesday. Inventories of crude grew by 4 million barrels to 283.4 million barrels, but are still below year ago levels by about 3 percent, the Energy Department reported. The nation's inventory of distillate fuel, which includes heating oil and diesel, contracted by 2.4 million barrels to 116.6 million barrels, or 12 percent lower than a year ago. Also on today, OPEC urged Washington to release more oil from its strategic reserve to calm the market, wrote Denver Post. Indeed, some economists have been paring back forecasts for U.S. economic growth, partly because of this year's rapid rise in oil prices. While the Bush administration tapped 5.4 million barrels of oil from the SPR for loans to strapped refiners on the Gulf of Mexico after Hurricane Ivan, it has held steadfast to its policy of only releasing large amounts of oil from the reserve in case of a major supply disruption. Oil prices have surged 70 percent this year, driven by strong demand and worries about stockpiles of crude oil and heating oil. Fears that refiners have not made enough heating oil to last the winter have added to the rally this month, reports CNN.
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