Oil drops below US$100 as supplies surge

Oil fell below $100 a barrel in New York and gasoline tumbled
the most in more than two years after an Energy Department report showed that
U.S. supplies surged and fuel demand slipped.

Crude futures dropped as much as 5.2
percent after the department said stockpiles jumped 3.78 million barrels to
370.3 million last week. Gasoline inventories unexpectedly increased 1.28
million barrels to 205.8 million, the first gain in 12 weeks. Total fuel
consumption declined 0.9 percent to 18.2 million barrels a day, the lowest
level since June 2009.

“We have a tremendous glut,” said Todd
Horwitz, chief strategist at Adam Mesh Trading Group in New York. “The rally in
commodities appears to be over. We’re going to see prices work their way lower
in coming weeks.”

Crude oil for June delivery fell $4.51, or
4.3 percent, to $99.37 a barrel at 12:47 p.m. on the New York Mercantile Exchange. The contract slipped as much as $5.43 to $98.45. Oil
traded at $101.69 a barrel before the release of the inventory report at 10:30
a.m. in Washington.  

Gasoline for June delivery dropped 28.67 cents,
or 8.5 percent, to $3.093 a gallon in New York. The contract declined as much
as 9 percent, the biggest fall since Feb. 2, 2009.

CME Group Inc. suspended trading of
gasoline, crude and heating oil on the Nymex for five minutes starting at 12:06
p.m., said Laurie Bischel, a spokeswoman for the exchange in Chicago. Trading was stopped
after June-delivery gasoline fell 25 cents, the daily limit. Limits were
widened to 50 cents a gallon for gasoline and heating oil and $20 a barrel for