Oil prices were battered Wednesday, dropping to four-year-lows after new government data revealed that U.S. stockpiles of crude oil were larger than forecast.
The U.S. Energy Information Administration said that the nation's supply of crude grew by 1.4 million barrels last week. Analysts had expected inventories to shrink. That report contributed to a sharp-sell off in stocks, with the Dow Jones industrial average suffering its biggest daily drop in two months.
In its most recent short-term energy report, the EIA notes that spot prices for North Sea Brent, a benchmark crude oil, fell by over 15 percent last month and that monthly average Brent crude prices have dropped nearly 30 percent from their highs this past June to an average of $79 per barrel as of last month. That's the lowest monthly average since September of 2010.
Trading of West Texas Intermediate (WTI ) crude, another benchmark, fell more than 4 percent Wednesday to $61.07 a barrel.
"The move lower in crude oil prices was largely driven by a bearish inventory report, which revealed a build instead of the draw that was expected by the market," said Mazen Issa, an analyst with TD Securities, in a research note.
Much of the drop in oil prices is due to the ongoing North American oil boom, as producers in Canada and the U.S. bring vast new supplies of oil and natural gas to the international energy market.
Also weighing on oil prices Wednesday was a forecast by the Organization of Petroleum Exporting Countries that global demand for crude would fall sharply next year. OPEC said last month that it would maintain oil production levels despite the glut of crude on the global market.
In its December monthly report, the oil cartel revised its projected demand for OPEC-produced crude in 2015 down to 28.92 million barrels per day. According to Reuters, that would push demand for OPEC crude down to its lowest levels in more than a decade, and well below the cartel's current output.
As oil supplies have surged, U.S. gas prices have plummeted, falling more than 40 percent since June, notes Lindsay Piegza, an economist with brokerage firm Sterne Agee. A gallon of regular unleaded gas, which as of April cost an average of $3.70, is now down to $2.64, according to AAA.
While American families and businesses may be enjoying the lower oil and gas prices, there has also been an economic cost in some parts of the U.S., as oil companies begin cutting jobs and curbing investment as they slow down oil and gas production.