Oil prices fell to a five-month low overnight on Wall Street as investors worry about the ongoing crude oversupply. US crude for September delivery closed down 59 cents, at $45.15 (£29.08) a barrel on Wednesday (August 5th) in New York – its lowest since March 19th.
The slide came despite figures from the US Energy Information Administration released yesterday showing stockpiles of US crude had fallen by 4.4 million barrels to 455.3 million barrels in the week to the end of July.
However, while oil inventories have fallen for two weeks in a row at a much faster rate than expected, stocks are still just six per cent below April's record high.
"The overarching theme in the oil market … is the status of US oil supply and whether or not we'll be facing an imminent decline and the latest weekly data hasn't brought any comfort relative to those kind of expectations," BNP Paribas oil analyst Harry Tchilinguirian told CNBC.
Oil price hit by global economic slowdown
The oil price has lost 21 per cent this quarter on the growing oversupply due to a global slowdown in economic growth and the signature of a deal between Iran with the West over its nuclear program.
Tehran and six world powers reached a nuclear deal which is expected to increase the supply of Iranian crude.
"Even with a historic deal, oil from Iran will take time to return, and will not be before next year, most likely the second half of 2016," Amrita Sen, chief oil analyst at London-based consultancy Energy Aspects, told Reuters.
"But given how oversupplied the market is, with Saudi output at record highs, the mere prospect of new oil will be bearish for sentiment."
Oil prices have been tumbling since the summer of 2014, dropping below $45 a barrel at the end of 2014, due to a weakening demand in industrialised countries following the financial crisis.
The International Energy Agency said world oil stocks will continue to build until at least the end of 2016.