Crude oil futures plunged Wednesday as the dollar dramatically strengthend versus major counterparts.
That's after data showed a large increase in the rate of wholesale inflation.
August West Texas Intermediate crude oil fell $3.73, or 5%, to $70.38 a barrel on the New York Mercantile Exchange. It was the biggest daily decline in a year.
Producer prices in the U.S. increased by slightly more than expected in the month of June, according to a report released by the Labor Department on Wednesday, with the annual rate of price growth accelerating to its highest level in over six years.
The Labor Department said its producer price index for final demand rose by 0.3 percent in June after climbing by 0.5 percent in May. Economists had expected prices to edge up by 0.2 percent.
Chicago Fed President Charles Evans, considered a dovish policy maker compared to his colleagues, is now in favor of raising interest rates. He tells the WSJ: "The economy seems so strong it seems natural that businesses and consumers can live with" slightly higher rates."
Meanwhile, the Energy Information Administration reported that domestic crude supplies plunged by 12.6 million barrels for the week ended July 6. The American Petroleum Institute on Tuesday reported a drop of 6.8 million barrels.