One such moment occurred on Tuesday when weaker-than-expected US economic data briefly suppressed the dollar. This brought crude off session lows, but only for an about an hour before the downward path resumed. Refined products such as gasoline and heating oil also bounced up briefly in morning trade, rallying as investors took profits on short positions. But products later succumbed to the trend, and gasoline settled 2 percent down.
-- Brent nears $50-a-barrel test; US crude settles under $48
-- Crude down more than 55 percent from summer highs
Crude oil prices have plunged more than 55 percent since June, when benchmark Brent traded above $115 a barrel and US crude above $107. In Tuesday's session, Brent settled down $2.01 at $51.10 a barrel. It came close to testing the $50 support, falling to a May 2009 low of $50.52. In the first two days of this week, Brent has lost $5.32, or almost 10 percent.
US crude finished down $2.11, or 4.2 percent, at $47.93, after plumbing an April 2009 low at $47.55. "I think the likelihood of seeing $46 to $45 is quite likely," Phillip Streible, senior market strategist at RJO Futures in Chicago, said. "People, I think, are further understanding that the US is becoming a powerhouse in creating crude oil and that's not going to change anytime soon."
The selloff in oil began six months ago on concerns of oversupply in high quality US shale crude. It accelerated after the Opec meeting in November, when Saudi Arabia ruled out production cuts as a means of boosting prices. On Tuesday, Saudi Arabia's King Abdullah said in a speech read for him that the country would deal with the challenge posed by lower oil prices "with a firm will", giving no signs the No 1 crude exporter will cut supplies.
On Monday, the kingdom's announcement of further oil price discounts for its European and US buyers added to the bearish state of oil markets already staggering from Russian output at post-Soviet-era highs and Iraqi oil shipments near 35-year highs. US commercial crude oil and products stockpiles were forecast to have risen in the week ending January 2, an expanded Reuters survey showed on Tuesday.