International benchmark Brent crude has almost halved since reaching a 2014 high of 115 dollars a barrel in June. Ample supply, slowing demand and a switch in strategy by exporter group OPEC to defending market share rather than prices have all hit crude prices.
A report showing Chinese industrial activity shrank for the first time in seven months in December added to concern about oil demand. China is the second-largest oil consumer after the United States.
Brent crude fell as low as 58.50 dollars, its weakest since May 2009. As of 1442 GMT it was down 2.05 dollars at 59.01 dollars while US crude was down 1.86 dollars at 54.05 dollars a barrel.
“The trend remains down,” said Robin Bieber, technical analyst and director at London-based oil broker PVM Oil Associates. “It is not advised to be long.”
The Organization of the Petroleum Exporting Countries declined to cut production at a November 27 meeting and, despite slumping prices, major Gulf OPEC members have since shown no sign of reversing course, seeing no need for an emergency OPEC meeting.
Russia’s energy minister also said on Tuesday his country will not cut production. Before OPEC’s meeting Russia, not an OPEC member, had hinted it could cut supply if OPEC did the same.
Weakening emerging-market currencies and economies—the drivers of growth in global oil demand—also weighed on prices, analysts said.
In Russia, one of the world’s largest oil producers, the central bank hiked its key interest rate by 6.5 percentage points to 17 percent on Tuesday in an attempt to halt a collapse in the ruble.
In India, the Reserve Bank has been intervening in support of the struggling rupee, triggered by a worsening trade deficit, and in Indonesia the rupiah dropped to its lowest in 16 years against the US dollar.
“The sharp decline in nearly all commodity prices and the weakening in commodity currencies creates headwinds for oil demand in the commodity-producing emerging markets in Latin America and the Middle East,” Goldman Sachs said in a report.
“Historically these regions didn’t contribute much to oil demand, today they do.”