Oil steadied above $53 after falling to fresh 19-month lows earlier in the session as the market remained pressured by yesterday's larger-than-expected rise in US fuel inventories and by mild winter temperatures.
Earlier this morning in London, front-month Brent North Sea crude contracts for February delivery were down 7 cents at $53.60 a barrel, having earlier hit an intra-day low of $52.60 - the lowest point since early June 2005.
Front-month New York light sweet crude contracts for February delivery lost 38 cents at $53.64 a barrel, having earlier hit an intra-day low of $52.94 - also the lowest point since early June 2005.
Oil prices have lost some 13 per cent of their value this year as milder-than-usual temperatures in the US northeast, the world's largest heating-oil market, reduce heating-oil demand and lead to a build up in fuel inventories.
Prices plummeted yesterday after US inventory data showed stocks of both gasoline and distillates, which include heating-oil fuel, rose more than expected last week amid continued mild winter temperatures.
Although the data also showed a greater-than-expected decline in crude stockpiles, the market remained focused on the counter-seasonal build in distillates and the accompanying drop in demand for the fuel.
Opec President Mohammed al-Hamli said today the cartel is very concerned about the steep decline in oil prices and will take further action to stabilise the market if needed.
However, he added no decision had been made yet about whether to hold an emergency meeting ahead of the cartel's next production meeting, scheduled for March.
Last November, Opec cut output by 1.2 million bpd in a bid to defend oil prices. The cartel also agreed late last year to cut output by a further 500,000 bpd from February 1st this year.
However, the Opec output cuts have largely failed to stabilise prices, as data from various research bodies has increasingly shown Opec members did not comply fully with the cuts.
Bank of Ireland analyst Paul Harris noted today's oil price lows came in spite of news that Saudi Aramco had informed its Asian clients it will pare back exports by 10 per cent in February in line with the cuts agreed last year.
He added that warnings earlier by Mr al-Hamli that oil markets are oversupplied may yet support prices as traders become wary of pushing the market too low "when the prospect of additional production reductions remains".
Agencies