OIL prices dropped more than 2 percent and hit a seven-week low yesterday after the government said US supplies of crude keep growing.

The Energy Department's Energy Information Administration said crude supplies rose by 9 million barrels, or 2.5 percent, to 362.4 million barrels. That's more than 1 percent above year-ago levels.

The price of benchmark US oil fell US$2.54, or 2.4 percent, to finish at US$101.47 a barrel on the New York Mercantile Exchange. It hadn't closed below US$102 per barrel since Feb. 15.

In London, Brent crude fell by US$2.52 to end at US$122.34 per barrel at the ICE Futures exchange.

The decline coincided with a sell-off in US stock markets. The Dow Jones industrial average and the S&P 500 index were off about 1 percent, a day after a weak bond auction in Spain caused fears about Europe's debt problems to flare up again.

A stronger dollar, which makes crude more expensive for investors using other currencies, also weighed on prices. Yesterday the euro was down to US$1.3134 from US$1.3217 late Tuesday.

In other energy trading, heating oil fell by 6.66 cents to finish at US$3.1609 per gallon and gasoline futures fell 6.18 cents to end at US$3.3336 per gallon. Natural gas dropped 4.6 cents to finish at US$2.141 per 1,000 cubic feet.
 

Source:shanghaidaily