U.S. supply, 'Twist' news prompt oil price drop

By Chris Kahn

Associated Press

Published: Wednesday, June 20 2012 8:13 p.m. MDT

NEW YORK — A "build" and a "Twist" knocked oil prices to the floor on Wednesday.

In the morning, the government announced a surprise increase, or build, in U.S. oil supplies. That told investors that America has a bounty of crude and less need to import more from foreign countries. Then, the Federal Reserve extended an interest-rate reduction program known as Operation Twist, but declined to take more aggressive steps to boost the economy.

Together, they sent the price of oil to a nine-month low.

Benchmark U.S. crude dropped $2.23, or 2.7 percent, to end the day at $81.80 per barrel in New York. That's the lowest level since October. Brent crude, which is used to price much of the oil imported into the U.S., lost $3.07 to finish at $92.69 per barrel in London. That's Brent's lowest finish since December 2010.

Wednesday's drop was among the biggest in a nearly two-month swoon that has slashed 23 percent off the price of oil.

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