Oil prices sink further in Asian trade after breaking through key psychological levels

Part of the BP Eastern Trough Area Project oil platform in the North Sea. Oil sank to new lows in Asia on Dec 17 as dealers watch Russia's rouble crisis and await the latest US crude supply report. -- PHOTO: REUTERS
Part of the BP Eastern Trough Area Project oil platform in the North Sea. Oil sank to new lows in Asia on Dec 17 as dealers watch Russia's rouble crisis and await the latest US crude supply report. -- PHOTO: REUTERS

SINGAPORE (AFP) - Oil suffered fresh losses in Asia on Wednesday, sinking to new multi-year lows as dealers watch Russia's rouble crisis and await the latest United States crude supply report, analysts said.

US benchmark West Texas Intermediate for January delivery sank US$1.16 in mid-morning trade to US$54.77 while Brent crude for February fell 82 US cents to US$59.19 on the contract's first day of trading.

Brent for January finished down US$1.20 at US$59.86 in London, after slipping below the psychological US$60 for the first time since July 2009.

Oil investors are closely watching the situation in crude producer Russia after the rouble on Tuesday crashed to new record lows against the dollar, losing some 20 per cent in value.

The slump came despite the country's central bank hiking interest rates from 10.5 per cent to 17 per cent. Russia's economy has been battered by slumping oil prices and Western sanctions over Moscow's support for Ukrainian separatists.

"Should oil prices fall further, then worries may increasingly grow among Russian corporates and households," Credit Agricole said in a commentary.

With demand for the safer US dollar in Russia, "the authorities may have to consider measures to cap expectations of bank runs", the French lender said.

Dealers will next focus on the release later on Wednesday of a US oil supply report for clues about demand in the world's top crude consumer, analysts said.

Analysts surveyed by the Wall Street Journal tipped reserves to have fallen by 1.9 million barrels on average in the week to Dec 12.

However, oil prices are expected to stay at multi-year lows owing to weak global demand and the Opec oil cartel's refusal to cut output despite a global supply glut.