The price of oil took another dive Wednesday, plunging to five-year lows amid mounting evidence that global supplies are far outstripping demand.
The U.S. Energy Department reported a surprise increase in domestic oil inventories and OPEC projected that next year, demand for its crude would sink to levels not seen in more than a decade.
Benchmark U.S. crude slumped 4 per cent Wednesday, or $2.60, to $61.23 a barrel. Prices have not been that low since July of 2009. U.S crude prices have fallen 17 per cent in two weeks and are now 43 per cent below the $107.26 that a barrel fetched at its peak this year.
Brent crude, an international benchmark used to price oil that ends up in many U.S. refineries, fell $2.50 to $64.34 in London.
OPEC said Wednesday it expects demand for its crude to fall to 28.9 million barrels per day, 400,000 barrels per day less than 2014. The cartel's official production target is 30 million barrels a day, which would mean far more oil on the world market than is being consumed.
Also on Wednesday, the Energy Department reported a surprise increase in U.S. crude supplies of 1.5 barrels last week. Analysts were expecting a decline of 2.2 million barrels. Gasoline stocks also increased more than expected.
The latest report of abundant U.S. supplies comes one day after the Energy Department again revised lower its projections for the average price that Americans will pay at the pump.
The U.S. now believes a gallon of gas will average $2.60 in 2015, 23 per cent below this year's projected average.
