Oil Prices Drop as Crude Inventory Soars

The release of a report from the American Petroleum Institute on late Tuesday revealed a strong increase in crude inventories in the U.S., rising by 5.87 million barrels last week.

The market had been operating under the assumption there would be a decline in oil inventory.

Concerns over demand from consumers and others continues to weigh on the oil sector, as economic conditions continue to be weak and consumers remain in an austerity mode.

The API added that distillates and gasoline inventories also increased in the same period.

"The API numbers were bearish, showing inventory builds in both refined products and in crude oil stocks, and showing weaker demand," said Cameron Hanover. "The big question for Wednesday is whether the DOE report will in any way mirror the API numbers."

That report for the Energy Information Administration will be released later today revealing data concerning the weekly supply.