Crude futures plummeted to below $89 a barrel Thursday as concerns for China's economy lingered. Investors fear China will increase interest rates again to ease inflation. Such a move would curb economic growth and the demand for energy.
In spite of several recent efforts to slow down the economy, recently released government reports indicate a 9.8-percent growth rate for the fourth quarter. After the U.S., China is the world's largest energy consumer.
The U.S. Energy Department reported that crude-oil inventories rose for the first time in seven weeks. For the week ended Jan. 14, crude increased by 2.62 million barrels to 335.7 million barrels.
Light, sweet oil for February delivery dropped $2, or 2.2%, settling at $88.86. Crude traded between $88.00 and $90.86 Thursday. The February contract for crude expired Thursday.
Meanwhile, natural gas prices surged to its highest in more than five months Thursday. The increase came on cold weather and a decrease in natural gas inventories. The Energy Department reported a decrease of 243 billion cubic feet for the week ended Jan. 14, much higher than anticipated. The drop was higher than the five-year average of 133 billion cubic feet.
Natural gas gained 2.9 percent Thursday, settling at $4.695 per thousand cubic feet. The intraday range was $4.53 to $4.70.
Front-month gasoline ended Thursday's trading session at $2.42 a gallon, down 5.87 cents, after fluctuating between $2.398 and $2.482.
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