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World oil prices tumbled close to six-year lows this week, as record-high US crude inventories deepened worries over the global supply glut.
In another blow, official data showed on Friday that the US economy slowed sharply in the fourth quarter of 2014, sparking fears over demand in the US, which is the world’s biggest oil consumer.
New York crude oil dived on Thursday to $43.58 per barrel, striking a nadir last seen on March 12, 2009.
Prices plunged after official data showed on Wednesday that US crude stockpiles surged by 8.9 million barrels to 406.7 million in the week to January 23.
The overall level of stockpiles was the highest since the US government began keeping weekly records in 1982.
Meanwhile, data showed that US gross domestic product (GDP) grew at an annual rate of 2.6 per cent in the fourth quarter. That marked a steep decline from the brisk 5.0 per cent growth in the third quarter.
“Weaker than expected US GDP numbers reinforce the perception that we are seeing a little bit of a slowdown in the pace of the US recovery,” said CMC Markets analyst Michael Hewson.
“With oil storage at record levels this suggests that demand is likely to remain weak, and thus exert further limitations on the ability of oil prices to rebound, suggesting we could well see a gradual move towards the $40 level,” he warned.
In reaction to the US inventories data, meanwhile, WTI dropped $1.78 and Brent lost $1.13 on Wednesday.
Sucden analyst Myrto Sokou added that the weekly US energy report “indicated a prolonged deterioration in oil fundamentals” of supply and demand.
The oil market has lost more than half its value since June last year when crude was sitting at more than $100 a barrel due to a supply glut, boosted largely by robust US shale oil production, and weak global demand.
The problem was exacerbated in November after the OPEC oil cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 per cent of global crude.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in March edged up to $49.65 a barrel from $49.55 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for March dipped to $45.35 a barrel compared with $46.91.
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