OPEC has not yet indicated that it will limit oil production to drive prices back up
Oil prices fell sharply on Wednesday, with US crude approaching $80 a barrel after data showed a second big jump in weekly US crude stockpiles, Reuters reported.
Oil had a brief period of tentative consolidation in choppy morning trade. Then prices fell steadily throughout the afternoon as dealers absorbed data showing US crude inventories rose much more than expected in the latest week.
The rising US dollar and falling equity markets also pressured oil.
Brent December crude fell $1.51 to settle at $84.71 a barrel. Brent has been slumping for nearly four months and last week touched a four-year low of $82.60.
US crude fell $1.97 or 2.5 percent to settle at $80.52 a barrel, just above the session low of $80.28.
The Energy Information Administration said US crude inventories rose by 7.11 million barrels, more than double the 2.7 million-barrel increase analysts expected. Refiners reduced runs amid seasonal maintenance. Midwest plants were running at their lowest mid-October rates in at least four years.
"The large crude oil build is the dominant feature of the report, making it bearish overall," said John Kilduff, partner at Again Capital LLC in New York.
Brent has tumbled from $115 in June on abundant supply, OPEC's reluctance to curb output and concerns that slowing economic growth in Europe and China would dent oil demand.
Some traders have suggested that prices may be bottoming out, citing growing expectations that a price near $80 a barrel could slow growth in production from the booming US shale oil patch or Canada's costly oil sands reserves.
Others remain anxious about the downside.
"The market is going to push $80 again because they want to test OPEC into cutting production," said Andrew Lipow of Lipow Oil Associates. "Other countries in the region require higher prices in order to sustain their spending, but lower oil prices just make the neighborhoods that Saudis and Kuwaitis live in that much more difficult."
OPEC has not yet indicated that the organisation would limit oil production to drive prices back up. Nigeria is basing its 2015 budget on an assumed price of $78 per barrel, up from $77.50 in 2014, Reuters reported.
Libya's OPEC governor said OPEC should cut oil production at least half a million barrels per day, with his country exempt as it recovers from months of fighting and protest.
US gasoline stocks last week fell to 204.37 million barrels, more than expected in today's EIA report due to maintenance and refiners selling transition gasoline ahead of the switch to winter grade, analysts said.