U.S. oil ended Wednesday on a sharply weaker note, tumbling below $97 per barrel after being hit by a double-whammy of surging crude stockpiles and a Federal Reserve decision that preserved the status quo.
West Texas Intermediate, or WTI, settled down 1.5 percent at $96.77, its lowest close since July 2, after the Fed--in a widely expected decision--said it would not curtail its $85 billion bond purchases. That stimulus is considered favorable to commodity prices, leading some investors to interpret the Fed's slightly more optimistic tone as a signal of an eventual taper.
Meanwhile, the U.S. Energy Information Administration reported a sharp 4.1-million-barrel rise in crude stocks in the United States, a bearish development for crude. Supplies at the Cushing, Oklahoma, U.S. oil storage hub rose 2.2 million barrels, their third straight weekly rise. That data further pressured U.S. oil's discount to international benchmark Brent.
Disruptions to Libyan oil exports have cut supplies to Europe and Asia while supporting Brent prices.The divergent courses of the North American and international oil markets boosted Brent's premium over the U.S. benchmark to more than $12 a barrel.
Brent crude for December delivery was trading up nearly 1 percent near $110 a barrel, after falling 60 cents on Tuesday.
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—By CNBC.com, with Reuters