Oil Prices Tumble Again

Oil Prices Tumble AgainOil Prices Tumble Again

Oil prices fell to fresh 5-1/2 year lows on Tuesday, extending losses after a 5 percent plunge in the previous session as worries over a global supply glut intensified.The plunging prices had a negative impact on global markets including Japan's Topix index, which fell by the most in three months.

Brent crude fell close to $51 a barrel, its lowest since 2009, with cuts to Saudi Arabia's official selling prices to Europe this week adding more pressure to the 55 percent price rout since June, BBC reported.

Saudi Arabia's King Abdullah, in poor health last week, said the country would deal with the challenge posed by lower oil prices "with a firm will" but gave no sign the world's top exporter was considering changing its policy of maintaining production in the face of fast-growing US shale supplies.

The Saudi official price cuts on Monday added to bearish data over the weekend showing that Russia's 2014 oil output hit a post-Soviet-era high and December exports from Iraq, OPEC's second-largest producer, reached their highest since 1980.

Brent crude fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It lost as much as 3% earlier on Tuesday to $51.23 before recovering. US crude was at $49.27, down 77 cents, after falling to $48.47, its lowest since April 2009. A slew of factors was keeping up the downward pressure on prices, analysts said, pointing to concerns about the Greek economy, high oil output from Russia, Iraq and the United States, and a stronger dollar. "The weak euro should be one of the reasons," said Tamas Varga of PVM oil brokerage in London. "When the Saudis are cutting prices, the markets are not going to go higher."

In the face of official price cuts, markets shrugged off news about rising hostilities and lower oil production in Libya, as well as data showing the number of rigs drilling for oil in the United States fell for a fourth straight week.

US commercial crude oil and products stockpiles were forecast to have risen in the week ending Jan. 2, a preliminary Reuters survey showed on Monday.