(CBS/AP) - Oil prices dipped to $61 a barrel Wednesday after the U.S. government released data showing healthy crude inventories and a surge in domestic supplies of distillate fuel, which includes diesel and heating oil.
In its weekly report, the U.S. Energy Department said the nation's inventory of distillate grew by more than 4 million barrels, a sign that refiners are ramping up output of refined products that will be in greater demand in the coming months and therefore command higher prices than gasoline.
Crude oil futures have plummeted more than 20 percent over the past two months as worries have eased about supply threats and signs of economic weakness in the U.S. could point to softening energy demand.
Tom Kloza, chief oil analyst for the Oil Price Information Service, predicted weeks ago that U.S. consumers would see falling gas prices. Now, he tells CBS Radio News that prices may sink even further down.
"It's pretty easy to see there's enough momentum to take nationwide unleaded gasoline down below $2.25 in the next two weeks, and we're already seeing some markets with sub-$2.00 rates popping up," Kloza
Fall is traditionally the peak delivery season for the diesel-thirsty trucking industry, but Wall Street analysts have warned in recent weeks that shipping volumes are not robust. The U.S. airline industry has also retrenched in the face of decreasing passenger traffic, according to data maintained by the Air Transport Association.
With winter approaching and the hurricane season appearing to wind down, some of the hurricane fears that are going away, which is also contributing to the falling gas prices.
Markets also have been keeping an eye on Iran's standoff over its nuclear program.
Tehran, OPEC's second largest exporter, has so far managed to avoid any punitive sanctions, which the U.S. is seeking, and market jitters over any potential disruption to the supply chain appear to be dwindling.
The latest Energy Department data showed distillate fuel inventories growing by 4.1 million barrels last week to 148.7 million barrels, or more than 11 percent above year ago levels. Gasoline inventories increased by 600,000 barrels to 207.6 million barrels, or 6 percent above year ago levels.
Crude oil inventories declined by 2.8 million barrels to 324.9 million barrels — but that's still 5 percent more than last year and well above the five-year average for this time of year.
Meanwhile, oil giant BP announced it plans to invest $3 billion dollars in its Whiting, Ind., oil refinery. It will allow the facility to process heavy Canadian crude oil and increase production of motor fuels by about 15 percent. The refinery in Northwestern Indiana produces about 4.5 billion gallons of transportation fuel each year.
Light sweet crude for October delivery on the New York Mercantile Exchange fell 66 cents to $61 a barrel. November Brent on the ICE Futures Exchange fell 67 cents to $61.50 a barrel.
A Saudi aggression fighter jet targeted a citizen's car driving in Fara area of Kutaf district in Saada province overnight, killing the driver and injuring his friend, a security official said on Monday.
Scores of Saudi enemy soldiers were killed and injured on Sunday when the army and popular forces repelled a Saudi military attempt to sneak into Shurfah site in the border province of Najran, a military official said.
The operation was accomplished successfully against the Saudi
Saudi aggression warplanes have launched more than 49 airstrikes over the past hours on several residential areas across Yemen, a security official said on Sunday.
The airstrikes targeted the areas of Malahiz and Husama in Dhahir district, and areas Thuban, Masahif and Sdad in Bakim district of northern Saada province.