LONDON – New York oil prices sank to a six-year low on Monday, falling below $44 per barrel as the market was plagued by plentiful supplies and the strong dollar.
In earlier deals, U.S. benchmark West Texas Intermediate (WTI) for April delivery dived as low as $43.57 -- hitting the lowest since March 12, 2009.
The contract later recovered slightly to stand at $44.40, down 44 cents from Friday's closing level.
European benchmark Brent North Sea crude for April fell 79 cents to $53.38 a barrel in midday London trade.
Crude futures had plunged by more than two dollars on Friday after the International Energy Agency (IEA) warned of U.S. crude reserves reaching storage capacity with little sign of a slowdown in output despite a global glut.
"Selling pressure was generated on Friday by the IEA, which warned that storage capacities could soon be exhausted in the United States," said Commerzbank analysts.
"The reason cited by the IEA was the massive oversupply, which stems first and foremost from the still rising U.S. oil production."
The U.S. Department of Energy last week said stockpiles in the world's top crude consumer climbed to a fresh record high of 448.9 million barrels.
"This week could be even more bearish for oil as there has been no shift in supply," Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.
Singapore-based Phillip Futures said "with fundamentals remaining unchanged, we hardly find a reason for crude oil to break higher or even lower".
Crude prices lost some 60% of their value to decline to about $40 per barrel between June and late January owing to an oversupply in world markets, a weak global economy and the soaring dollar.
Prices have since rebounded following a slowdown in U.S. oil-drilling activities, but analysts say volatility is likely to continue for some time.
"Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly," the Paris-based IEA, which advises energy consuming nations, said last week.
McCarthy said oil prices are also under pressure owing to gains in the dollar against other major currencies ahead of a closely watched U.S. Federal Reserve policy meeting on Wednesday.
A stronger U.S. dollar makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand.
Copyright Agence France-Presse, 2015