Brent for February settlement today (January 7th) slid as much as $1.44 to $49.66 (£32.92) a barrel on the London-based ICE Futures Europe exchange, fuelling concerns of a global slowdown. This was the first time since May 2009 that oil fell under $50 a barrel.
Crude stockpiles in the US, already at the highest for the time of year in three decades, probably expanded by 700,000 barrels last week, a Bloomberg survey showed.
Oil slumped by 48 per cent last year as the Organization of Petroleum Exporting Countries (Opec) decided to maintain its output ceiling.
The market’s oversupply may take “months or years” to be absorbed, United Arab Emirates energy minister Suhail Al Mazrouei told Bloomberg.
In December, the Opec voted to retain current oil production levels despite falling prices. It followed a meeting of the cartel in November in Vienna where members discussed the potential to reduce output. Nations such as Saudi Arabia, United Arab Emirates and non-member Russia voiced their opposition to any drop in production.
Trying to pick the bottom of oil's price plunge may be tricky this time, according to an analyst quoted by CNBC.
"Normally, when you have a collapse in a commodity price, it's in response to some supply demand shock," said Mark Keenan, a cross-commodity strategist at Societe Generale. "[But] you've actually had a change in the supply and demand curve so you can't really apply traditional shock dynamics."
He expects oil will fall further, citing a host of bearish supply news, such as expectations the US will export more of its oil and record production levels from Iraq and Russia.
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