Crude oil fell by more than $1.5 on Wednesday after official data from the government showed a massive jump in crude oil inventories on a weekly basis from 1.0M to 7.3M (expected 1.3M). Upon the release of the news from the EIA crude oil futures spiked below the psychological level of $80 briefly, only to quickly retrace back up to nearly $81. It seems that during the past couple of sessions crude has been range bound, trading between $80-$82, unwilling to break away from these levels.

Crude futures had experienced weakness even before the release of the inventories news, mostly on the back of a stronger dollar against all the majors. Today's rating downgrade of Portugal by Fitch coupled by the ongoing concerns over the Greek debt issue has increased speculation that a sluggish European recovery will likely have a negative impact on crude demand.