Oil prices drop below $43 a barrel

SIOUX FALLS, S.D. (AP) — Energy prices plunged across the board Wednesday, giving up a week of gains with unexpectedly large U.S. crude reserves suggesting demand for energy has eroded even further.

Sweet crude for February delivery tumbled 12 percent, or $5.95, to settle at $42.63 a barrel on the New York Mercantile Exchange after the report was released.

The Energy Information Administration said inventories of commercial crude oil inventories rose 6.7 million barrels, well beyond the 1.5 million-barrel build expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., can influence market trading.

Analyst Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said it was one of the more bearish EIA reports he’s seen in a while.

“This will take a lot of steam out of the geopolitical argument that this Russian-Ukraine standoff is going to disrupt supplies appreciably,” Ritterbusch said. “This report’s telling us that we’ve got a big supply cushion out there that can easily absorb a temporary curtailment of European supply.”

Russia Prime Minister Vladimir Putin on Wednesday ordered Gazprom to stop all shipments of natural gas to Europe through Ukraine. Russian gas is already failing to get through the pipelines.

Crude prices slumped alongside Wall Street, which dropped about 270 points on more bad economic news.

Demand for gasoline, according to the government report, also appeared to wane, with close to 2 million people losing jobs since the start of the year.

Gasoline inventories rose by 3.3 million barrels, more than twice what analysts had expected.

The national average price at the gas pump rose about four cents to $1.727 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.