Oil prices fell more than one per cent on Thursday after rebounding eight per cent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices.
Brent crude oil was down 70 cents, or 1.3 per cent, at 53.77 dollars a barrel by 0845 GMT.
U.S. light crude oil was 50 cents lower at 45.72 dollars.
Oil prices reached multi-year highs in early October but have fallen almost 40 per cent since then and are now approaching their lowest levels for 18 months.
Brent is heading for losses of almost 30 per cent this year while the U.S. contract has dropped almost 25 per cent.
Three months ago it looked as if the global oil market would be under-supplied through the northern hemisphere winter as U.S. sanctions removed large volumes of Iranian crude.
But other oil exporters have more than compensated for any shortfall, filling global inventories and depressing prices.
The fuel glut has combined with faltering investor sentiment in other asset classes, producing a bear market for oil.
Global stocks rebounded on Wednesday after U.S. President Donald Trump’s administration attempted to shore up investor confidence and a report on strong U.S. holiday spending.
The Organisation of the Petroleum Exporting Countries met earlier this month with other producers including Russia and agreed to reduce output by 1.2 million barrels per day (bpd), equivalent to more than 1 per cent of global consumption.
But the cuts won’t take effect until next month and oil production has been at or near record highs in the United States, Russia and Saudi Arabia, with the U.S. pumping 11.6 million bpd of crude, more than both Saudi Arabia and Russia.
Although U.S. sanctions have put a cap on Iran’s oil sales, Tehran has said its private exporters have “no problems” selling its oil.
“Markets need more concrete evidence on improving fundamental metrics and to bring the supply-demand relationship back to balance before oil prices can reach a real bottom,” said Margaret Yang, market analyst for CMC Markets.
Data on the U.S. market will appear in the next couple of days with figures from the American Petroleum Institute on Thursday and a report from the U.S. Energy Information Administration on Friday.
A Reuters survey estimated that U.S. crude inventories dropped 2.7 million barrels in the week to Dec. 21. (Reuters/NAN)