Oil prices fell to below $58 a barrel today, deepening their fall from recent records after an unexpected rise in US crude oil inventories.
Rising stocks added further downward momentum to a profit-taking slide that has knocked nearly six percent off prices since the market hit a record high on Monday.
US crude futures fell 70 cents to $57.50 a barrel, after plunging $2.34 yesterday. The market is over three dollars below Monday's record of $60.95 a barrel.
London Brent crude fell 80 cents to $56.38 a barrel.
US crude stocks rose by 1.1 million barrels in the week ending June 24, the US Energy Information Adminstration said today.
Stocks grew as crude imports rose 794,000 barrels per day to 10.97 million barrels, the second highest weekly average on record, the EIA said.
Refineries cranked up utilisation by 1.5 per cent to meet soaring distillate demand. Distillate stocks rose by 1.7 million barrels, slightly above expectations for a rise of 1.5 million barrels.
High prices appear to have had little effect on either rapid US distillate demand or on global economic growth.
As the economy grows and truckers move more imports across the country, consumption of diesel is growing.
Diesel is one of the fuels that make up the distillate group, and higher demand for trucking is straining refinery distillate production capacity.
Oil prices have rallied over 32 per cent since the start of this year amid escalating concern that refineries will find it hard to meet rising winter heating oil demand in the fourth quarter combined with rising diesel demand.
In an effort to cool prices, the Organization of the Petroleum Exporting Countries is expected to decide on an output increase of another half a million barrels this week even though it is already pumping crude near its highest level in 25 years.
The output increase comes despite assurances from Saudi Arabia that it is already supplying all the crude that its customers want.
“The Saudis have been unable to find customers for additional oil despite having offered it,” said brokerage Refco in a report.
OPEC members have said the real problem is that global refining capacity has not increased in recent years to match speedy product demand growth in the US and China.