Oil hits 18-month low as demand falls

CRUDE oil fell, closing below $54 a barrel in New York for the first time in more than 18 months, after a US Energy Department report showed that US fuel stockpiles rose for a fourth week.

Inventories of distillate fuel, a category that includes heating oil and diesel, surged 5.4 million barrels to 141 million in the week ended January 5, the biggest gain since January 2004, the report showed. Petrol supplies rose 3.76 million barrels to 213.3 million. Crude oil stockpiles fell as refineries increased operations to the highest rate since September.

“The petroleum product increases in the report were huge, overshadowing everything else,” said Aaron Kildow, a broker at Prudential Financial Derivatives in New York. “The drop in crude oil stocks is being shrugged off because most end users can’t use crude oil.”