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 Brent crude fell by 3 percent to below $52 a barrel as cuts to
monthly oil selling prices for European buyers by top OPEC producer
Saudi Arabia heightened worries about oversupply.
"Saudi Arabia is showing no signs of pulling back," said Bjarne
Schieldrop, chief commodity analyst with SEB in Oslo. "Stocks are
continuing to build, and there is an increase in contango."
While Saudi Arabia increased its selling price to Asia, some
analysts said the cuts to Europe reflect the kingdom's deepening
defense of market share.
This added to bearish data over the weekend showing that Russia's
2014 oil output hit a post-Soviet-era high and exports from Iraq,
OPEC's second-largest producer, reached their highest since 1980.
On Tuesday, the UAE's Abu Dhabi National Oil Company (ADNOC) set the
December retroactive selling price for its benchmark Murban crude at
$60.65 a barrel, its lowest level since May 2009.
 "It's hard to pinpoint a specific downward pressure," Schieldrop
said.
Brent crude <LCOc1> fell as low as $51.23 a barrel on Tuesday, its
lowest level since May 2009. It was trading at $51.31 at 0942 GMT
(0442 ET), down $1.80.
U.S. crude <CLc1> was at $48.54, down $1.50, after falling to
$48.47, its lowest since April 2009.
Jitters over political uncertainty in Greece added to an already
faltering eurozone economy, raising questions about energy demand in
Europe and compounding the bearish sentiment.
A slew of factors was keeping up the downward pressure on prices,
analysts said, pointing to concerns about the Greek economy, high
oil output from Russia, Iraq and the United States, and a stronger
dollar.
"The weak euro should be one of the reasons," said Tamas Varga of
PVM, adding: "When the Saudis are cutting prices, the markets are
not going to go higher."
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A rise in the dollar index <.DXY> for a sixth straight month in
December has made dollar-denominated oil more expensive for holders
of other currencies, depressing prices.
U.S. commercial crude oil and products stockpiles were also forecast
to have risen in the week ending Jan. 2, a preliminary Reuters
survey showed on Monday, which could weigh further on prices.
[EIA/S]
Some economists expect cheaper oil to boost consumers' purchasing
power and buoy the global economy, but the more-than-50-percent
plunge in oil prices since June has also raised deflationary fears.
"This is great news for motorists, but it presents a headache for
policy makers, with the Fed keen to get their policy settings back
to something more normal, and Europe keen to avoid a deflationary
spiral," ANZ analysts said in a note.
(Additionall reporting by Florence Tan in Singapore; editing by
Jason Neely)
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