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Crude oil prices plunged sharply on Thursday, weighed down by concerns about excess supply in the market and on worries about possible drop in energy demand.
Data released by the Energy Information Administration on Wednesday showed a much less than expected drop in U.S. crude stockpiles in the week ended December 14.
Additionally, traders fear that the Federal Reserve's commitment to tighten monetary policy could significantly slow down growth. The Fed, while announcing its monetary policy on Wednesday, indicated two rate increases in the first half of next year.
Crude oil futures for February ended down $2.29, or 4.8%, at $45.88 a barrel, the lowest settlement in seventeen months.
On Wednesday, crude oil futures ended at $48.17 a barrel, gaining $1.57, or 3.4%, after having tumbled more than 7% a session earlier.
According to data released by the Energy Information Administration on Wednesday, crude stockpiles in the U.S. dropped by 497,000 barrels in the week ended December 14, much lower than an expected declined of 2.44 million barrels.
That was the third successive week of declines in stockpiles. Before that crude stockpiles in the U.S. had increased for ten straight weeks, and in most of the weeks, the increase was much more than what the market had predicted.
Recently, the OPEC and some non-OPEC oil producers agreed to reduce output by 1.2 million barrels a day, starting January 2019. However, traders are skeptical about the group implementing the production cut decision.
