Oil Plunges on Rising Inventories, Debt Concerns

NEW YORK, Jul. 28 -- Crude prices plunged on Wednesday as U.S. crude inventories unexpectedly rose last week and concerns over deadlocked U.S. debt ceiling talks lingered.

U.S. crude benchmark tumbled after the Energy Information Administration reported that U.S. crude stocks added 2.1 million barrels in the week ended July 22 as imports rose and demand from refineries declined, breaking the falling streak of seven straight weeks. Meanwhile, gasoline inventories gained 1.0 million barrels.

In Washington, policymakers remained divided in the debt ceiling debate. Once there was no deal reached before the deadline of August 2, when U.S. would run out of financing means, a debt default could surface, which would shake global markets and hurt world economy. Driven by the debt concerns, crude investors trimmed positions.

Besides, worse-than-expected durable goods orders for June pressured crude markets. And according to a Federal Reserve report, the pace of the economic recovery slowed in much of the U.S. in June and early July.

The dollar recovered and rose 0.8 percent after earlier sell- off against a basket of currencies, adding pressure to oil prices.

Light, sweet crude for September delivery fell 2.19 dollars, or 2.20 percent to settle at 97.40 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for September delivery slipped 85 cents, or 0.72 percent to close at 117.43 dollars a barrel.