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Brent crude oil fell to a 5-1/2-year low of below $57 a barrel on Tuesday as a global supply glut outweighed concerns of lost supply from Libya where battling militias have closed ports.
Brent fell $1.14 a barrel to a low of $56.74, its lowest since May 2009, before recovering slightly to trade around $56.95 by 0905 GMT.
US crude fell 75 cents to $52.86 after hitting $52.70 — also its lowest since May 2009. It fell $1.12 on Monday.
Supply disruptions in Libya mean the OPEC producer is exporting almost no crude.
Still, oil markets have been oversupplied in recent months due to increasing output of high quality, light oil from US shale and lower-than-expected consumption as a result of faltering global economic growth and competition from alternative fuels.
The Organization of Petroleum Exporting Countries, which pumps a third of the world’s oil, had been expected to trim output to stabilise prices, but it decided in November to keep the production unchanged and let the market find its own level.
“There’s no sign of any reduction of output by OPEC,’’ said Ken Hasegawa, commodity sales manager at Tokyo's Newedge Japan.
He said Brent could drop to $55 a barrel and US crude to $50 a barrel early next year.
Reuters’ technical analyst Wang Tao said Brent may fall to $54.98, as it has resumed its downtrend, while US oil is expected to drop to $52.10, as indicated by its wave pattern and a Fibonacci projection analysis.
Traders are now eyeing weekly US inventory data.
An industry group, the American Petroleum Institute, is scheduled to release its report on Tuesday, while the US Department of Energy's Energy Information Administration will release data on Wednesday.
A Reuters’ poll forecast that US crude oil inventories will show a drop of 900,000 barrels last week. A draw would follow a rise to the highest recorded level for December in the week ended on December 19.
“A potential surprise draw in US oil stocks would give a short-term fillip to the upside,’’ said Michael McCarthy, chief market strategist at CMC Markets.
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