Crude oil had its biggest decline since December 1994 on Wednesday, falling more than $6 per barrel after the Federal Reserve cut interest rates yesterday and a report today stated demand in the United States dropped.
The Fed reduced its lending interest rate by 0.75 percent to 2.25 percent yesterday to foster market liquidity, and promote economic growth. However crude futures fell today as the cut failed to calm investors' fears of a slumping economy.
The Energy Department reported that total demand of fuel in the last four weeks was about 20.3 million barrels a day, down 3.2 percent from a year earlier. Demand for distillate fuels including heating oil weakened by 5.4 percent last week the report showed.
Crude futures for delivery in April were down $6.17 or 5.64 percent to $103.25 a barrel on the New York Mercantile Exchange at 2:46 p.m. Futures rose as high as $111.80 a barrel on March 17, the highest since 1983 as the commodity sector benefit from investments prompted by a decline in the dollar.
Brent crude for delivery in three months fell $4.90 or 4.6 percent to $101.53 a barrel on LondonÂ´s ICE Futures Exchange.
The Energy Department said gasoline stockpiles fell 3.45 million barrels to 232.5 million on the week ended March 14.
The report showed inventories of crude rose 133,000 barrels to 311.8 million barrels recording the ninth gain in 10 weeks Bloomberg noted. As of imports, crude imports dropped 10 percent to 9.47 million barrels a day.