Oil dropped below $34 a barrel in New York after U.S. gasoline inventories surged the most in 22 years and crude supplies at the American hub climbed to a record.

Brent oil fell to an 11-year low in London as West Texas Intermediate tumbled to a seven-year low in New York. Gasoline stockpiles rose 10.6 million barrels last week, the most since May 1993, government data show. Crude inventories in Cushing, Oklahoma, the delivery point for WTI, advanced to an all-time high, while nationwide supplies slid. Adding pressure to oil was China’s central bank devaluation of the yuan, a reminder of the August cut that sparked financial-market turmoil.

Oil prices have shrugged off rising tension between Iran and Saudi Arabia as supplies continue to outstrip demand. The market also ignored a “cry for help” from Libya’s National Oil Corp. as Islamic State militants attacked crude storage tanks in the region of Es Sider, the country’s biggest oil port. Analysts from Citigroup Inc. to UBS Group AG predict crude may fall to $30 in the coming months.

West Texas Intermediate for February delivery declined $2, or 5.6 percent, to $33.97 a barrel on the New York Mercantile Exchange. It was the lowest close since December 2008. Total volume traded was 22 percent higher than the 100-day average at 3 p.m.

Brent for February settlement fell $2.19, or 6 percent, to $34.23 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since June 2004. The European benchmark crude closed at a 26-cent premium to New York futures.

Source : Bloomberg