The benchmark Brent crude tumbled about six per cent, hitting new 5-1/2 year lows. CREATIVE COMMONS
The benchmark Brent crude tumbled about six per cent, hitting new 5-1/2 year lows after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports at near 35-year peaks.
US driller ConocoPhillips added to the bearish sentiment somewhat, announcing it had struck first oil at a Norwegian North Sea project.
The euro's tumble to 2006 lows and slower-than-expected growth in US manufacturing, meanwhile, weakened prospects for the global economy.
"There's no doubt that we have a combination of supplies hitting their zenith at a time when demand is weakening," said Phil Flynn, analyst at Price Futures Group in Chicago.
US crude's front-month contract was down $2.46, or five per cent, at $50.23 a barrel just before noon, having fallen to $49.95 earlier. Front-month Brent hovered at $53 a barrel, down more than $3, after dropping to $52.66, its lowest since May 2009.
Some traders appeared certain that US crude will hit the $40 region later in the week if weekly oil inventory numbers for the United States on Wednesday show another supply build.
"We're headed for a four-handle," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York.
"Maybe not today, but I'm sure when you get the inventory numbers that come out this week, we definitely will." Open interest for $40-$50 strike puts in US crude have risen several fold since the start of December, while $20-$30 puts for June 2015 have traded, said Stephen Schork, editor of Pennsylvania-based The Schork Report.
Russia's oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 per cent thanks to small non-state producers, Energy Ministry data showed.
Iraq's oil exports were at their highest since 1980 in December, an oil ministry spokesperson said, with record sales from the country's southern terminals.
The Russian and Iraqi data overshadowed reports of drops in Libya's oil output due to conflict. Libya's oil output has fallen to around 380,000 bpd after the closure of the OPEC producer's biggest oil port Es Sider, along with another oil port Ras Lanuf.
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@Sam@ABE: Absolutely right, though I would change the list of priorities - their first objective is to cripple investments in shale oil extraction in the US. Already investments are down by 40% and only those companies that bought land at rock bottom prices are making a profit. The Saudis, however, may last longer because of their low production costs, but since their development plans (and subsidies to the populace) is based on a minimum price of $75/barrel or so, we have to wait long term ramifications. For the time being, its a good period for India (already saved $40 billion in oil import costs) and I guess for Pakistan as well.
By playing this game, The Saudis are burning through their cash. The twin objectives are to cripple Russia and kill the shale companies of USA and the tar sands companies of Canada. If they fail, given the youth bulge in ksa, an overthrow of the regime is possible ... And it could turn into a feeding frenzy esp. with Isis just around the corner
Imran Khan is responsible for this price fall. Not supply glut. What does Reuters know? My Quaid said so in his dharna. He is lowering the price of petrol
The price of a gallon in Pakistan should be just half what it was two months ago.
Lets hope the government takes this opportunity to balance its books and pay off debits......AND NOT FILL THEIR POCKETS WITH THIS BONUS.
With energy prices nearing all time lows it's time for Pakistan leaders to get off their duff and lock in some long term contracts.