LONDON, Jan 16: Oil prices sank under $90 on Wednesday as traders seized on rising US crude reserves and after US President George W. Bush called on Opec to increase output to help cut the cost of energy.

Meanwhile, the International Energy Agency kept its 2008 forecast for oil demand unchanged despite growing expectations of a recession in the United States, which would be expected to curb demand.

New York’s main contract, light sweet crude for delivery in February, plunged $2.06 to $89.84 per barrel, after falling as low as $89.26.

Brent North Sea crude for February sank $1.85 to $89.13 per barrel, after striking a low point of $88.71.

The US Department of Energy (DoE) said on Wednesday that American reserves of crude climbed by 4.3 million barrels in the week ending January 11.

The reading outshone market expectations for a gain of 1.25 million barrels and broke an eight-week run of successive falls.

“The inventory data is very bearish,” said Nas Nijjar at CMC Capital Markets. “Everything is a lot higher than expected.”

Oil prices remain at elevated levels, but have shed about ten dollars since striking a record high $100.09 per barrel earlier this month.

“Sentiment amongst market participants has really dropped as it is looking more and more likely that the US is sliding into recession,” Sucden oil analyst Nimit Khamar said.

Oil prices hit record highs at the start of the year and despite the reverse since then the cost of energy remains a major concern, especially as its helps drive inflation higher.—AFP