Oil Prices See Steep Drop On Inventory Data

July 16, 2008 3:49 p.m. EST

New York, NY (AHN) - The price of crude oil dropped for a second consecutive day after weekly inventories showed a build in supply levels, opposed to an expected decline.

Crude oil settled Wednesday at $134.48, down $4.26 a barrel.

The Energy Information Administration (EIA) reported crude oil supplies saw a build of 3 million barrels last week. Analysts were expecting a decrease in inventory levels.

The commodity was trading in the high 130's just before the release of the numbers at 10 AM Eastern. The news sent prices plummeting, trading down to 132 in the matter of minutes.

"I think anyone you talk to would have to be surprised by the magnitude of these huge price swings. This is extreme price volatility that no one can predict," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, according to the Associated Press

"Extended two-sided volatility like this is indicative of an impending price top," he added. "People wanting to get out are just as enthusiastic as people trying to get in."

The price of a barrel of oil has dropped more than $10 in the past two sessions.