Oil falls under $90 per barrel as supplies reach 22-year high

Commodity prices took another beating on Wednesday as the U.S. dollar continued climbing against the euro. U.S. crude oil fell 2 percent, dipping below $90 per barrel for the first time since November after a government report showed that U.S. crude supplies rose to a 22-year high.

U.S. crude closed at $89.53 per barrel on the New York Mercantile Exchange, and Brent crude closed at $105.58. U.S. crude prices have declined 9.4 percent this year.

Stocks were in a sell-off Wednesday in response to the uncertainty surrounding Greece and the rest of the sovereign debt issues in Europe. The euro fell to a near two-year low against the dollar. The dollar also found strength in news that U.S. new home sales rose more than expected in April.

Oil traders expect declines in the crude market to continue near-term. Some see prices headed toward the mid-$80s, and maybe test last summer’s low of $75 per barrel. Adequate supplies also support ideas of lower prices. The Energy Department said U.S. stockpiles rose 883,000 barrels to 382.5 million barrels last week.

Most ag commodities also declined Wednesday. June Live cattle closed down $1.55 at $117.80. Soybeans and wheat fell about 2 percent each on forecasts for rains in the U.S. and Russia. Nearby wheat contracts fell below $6.68 per bushel while soybeans slipped under $13.58.

Corn held up under the commodity sell-off, staying near flat at just below $6 per bushel on worries about warmer-than-normal temperatures in the major U.S. growing regions.

The Energy Information Administration quoted average U.S. gasoline prices at $3.71 per gallon this week, down 4 cents from the previous week and down 13 cents from last year. Average diesel prices were pegged at $3.95 per gallon, down 5 cents from last week and 4 cents lower than last year.

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