World oil prices plunged this evening in reaction to rising crude stockpiles in the US, which indicated weak demand in the world's biggest energy consuming nation.
New York's main futures contract, light sweet crude for delivery in February, sank $1.20 to $79.59 a barrel, after earlier hitting as low as $78.37. Brent North Sea crude for February dived $1.12 to $78.18 in London trading, having earlier touched $77.04.
New York crude had briefly surged on Monday to a 15-month high near $84 on the back of robust Chinese economic data.
The US government's Department of Energy said today that crude oil reserves surged by 3.7 million barrels in the week ending January 8. That was far more than expectations for a gain of one million barrels.
The Department added that distillates - including heating fuel and diesel - rose by 1.4 million barrels, confounding forecasts of a 1.8-million-barrel drop. Distillates are under the market's focus amid an ongoing cold snap in the US.
Oil prices had slumped yesterday on prospects of easing heating fuel demand in the US due to milder weather and new moves by China to cool off its economy. The news stoked the oil markets because China is the world's second biggest crude consumer after the US.
