By Drovers news source (Wednesday, October 08, 2008)

The silver lining of the global economic crisis for agriculture is the declining price of crude oil. Oil prices dropped below $88 per barrel on Wednesday after the government reported a surprise increase in U.S. crude inventories and a bigger-than-expected jump in gasoline supplies. Investors viewed the data as more evidence that a souring U.S. economy continues to crimp demand for fuel.

The U.S. Energy Information Administration said in its weekly inventory report that domestic crude stocks rose by 8.1 million barrels to 302.6 million barrels last week. The EIA also said gasoline stocks soared by 7.2 million barrels to 186.8 million barrels, well above the 2 million barrel increase analysts had expected.

Oil traders view excess supplies as another sign that U.S. consumers and businesses are cutting back on energy use. Oil industry analysts believe the U.S. credit crisis will spread around the globe, hurting world-wide crude oil demand. The average U.S. price of unleaded gasoline was $3.484 per gallon this week, down 14.8 cents from the previous week. Diesel prices averaged $3.875 for the week, down 8.4 cents per gallon. — Greg Henderson, editor