Rising US and Canadian oil production has contributed to ample global supplies at a time of slowing growth in China, the world's largest energy consumer, and other emerging-market economies, a recession in Japan and a near-stall in the 18-nation eurozone.
A decision last month by Opec, which supplies about a third of the world's oil, to leave output unchanged despite the price plunge also rattled the market, adding further pressure on prices.
And the US dollar's long-running rally, making greenback-priced oil more expensive for buyers using weaker currencies, has played a role in undermining the market, analysts said.
Though US crude oil stockpiles fell last week by 1.8 million barrels, that was a negligible drop compared with the prior week's surge.
Supplies were up 6.9 per cent from a year ago.
US crude production, at more than 9 million barrels per day, is at the highest level in more than 30 years.
James Williams, an energy expert at WTRG Economics, predicted that oil prices could continue to fall throughout the first quarter in 2015.
"Early spring is the lowest for oil demand seasonally, so prices could continue to fall maybe another US$10, but from that point I expect prices to rise, particularly in the second half, depending on the world economy." Daniel Ang, investment analyst at Phillip Futures in Singapore, also pointed to expectations for a price rebound in 2015.
He said the supply glut could be alleviated by current low oil prices affecting "existing shale oil rigs, causing them to shut off, keeping US crude oil production in check".
"In 2015, we believe that crude demand would be linked to how China, Japan and the eurozone perform. If we start to see the situation for these countries improve, a reversal from the demand side could happen," Ang added.
"[The] selloff is a fitting end to what's been a difficult year for the oil industry," said Adam Wise, who helps run a US$6 billion oil and gas bond portfolio at John Hancock in Boston.
- Bloomberg, AFP
