Oil Prices Plummet as Economic Worries Build

Oil fell 2 percent Wednesday after data showing a build in U.S. inventories and weak demand added to wider economic concerns that have weighed on prices over the past week.

U.S. gasoline stockpiles rose sharply and demand over the past four weeks fell 3.6 percent compared with a year-ago, according to the U.S. Energy Information Administration, adding to concerns about tepid consumption in the midst of the peak summer demand period.

Overall crude inventories increased as the U.S. government released more oil from the Strategic Petroleum Reserve as part of a coordinated effort with the International Energy Agency to make up for a disruption in supplies from Libya.

``The EIA report was bearish with the across-the-board builds,'' said John Kilduff, partner for Again Capital LLC in New York.

``With increasing concern over the economy and the consumer, the four-week, year-on-year, decline in gasoline demand sticks out as another indicator of consumer weakness and possibly bodes poorly for Friday's employment data.''

Earlier in the day, oil shrugged off positive data showing U.S. private employers added more jobs than expected in July as analysts said the focus remained on the longer term challenges for the world's largest economy and the euro zone's troubles.