By Jonathan Fahey
NEW YORK, N.Y. – Oil prices plunged for a second day Thursday, raising hopes that a relentless rise in U.S. gasoline prices may slow or reverse at least temporarily.
Benchmark crude oil fell $2.31, or 2.4 per cent, to $92.91 per barrel in midday trading in New York, the second drop of 2 per cent in two days. Brent crude, which is used to price oil used to make gasoline in many U.S. refineries, fell $1.76 to $113.84 in London.
Crude oil’s recent dip is a result of ample supplies and recent speculation that the Federal Reserve may soon allow interest rates to rise slightly, which would reduce the supply of easy cash investors have been using to buy commodities like oil.
“The market got way ahead of itself,” says Tom Kloza, chief oil analyst at the Oil Price Information Service.
Oil prices were pushed lower by a transcript of the latest Fed meeting that showed some policymakers expressing doubts about the central bank’s bond-buying program. If the Fed curtails or ends the program earlier than anticipated, that could affect economic growth and reduce demand for oil.
The Energy Department reported Thursday that crude supplies in the U.S. grew by 4.1 million barrels last week. That’s double what analysts expected. Ample supplies typically translate into lower prices.
Gasoline supplies fell by 2.9 million barrels, slightly less than analysts expected.
In other energy futures trading on the Nymex:
— Natural gas fell 3 cents to $3.25 per thousand cubic feet.
— Heating oil fell 5 cents $3.11 per gallon.
— Wholesale gasoline was down 2 cents to $3.23 per gallon.