Crude oil plunged below $37 a barrel after the U.S. government reported crude stockpiles jumped the highest since August 2007 as demand for fuel shrinks.

The U.S. Energy Department reported crude stockpiles increased 1.14 million barrels to 326.6 million the week ended Jan 9. Analysts forecasted an increase of 2.5 million barrels, according to a Bloomberg survey.

Gasoline inventories also climbed 2.07 million barrels to 213.5 million barrels and distillate fuels including heating oil and diesel rose 6.35 million barrels to 144.2 million barrels.

Crude oil futures for February delivery dropped $1 or 2.65 percent to $36.78 a barrel in the New York Mercantile Exchange by 11:54 a.m. Earlier prices dropped as low as $35.52 a barrel.

Brent crude for February declined 52 cents or $1.16 percent to $44.31 a barrel in the London ICE Futures Exchange.