Oil slumps as US crude reserves surge to record high

A worker walks past pump jacks on an oil field in Russia on Jan 28, 2015. Oil tumbled to near a six-year low Wednesday as US crude stocks soared to a record high, sparking fresh fears over the growing global supply glut. -- PHOTO: REUTERS
A worker walks past pump jacks on an oil field in Russia on Jan 28, 2015. Oil tumbled to near a six-year low Wednesday as US crude stocks soared to a record high, sparking fresh fears over the growing global supply glut. -- PHOTO: REUTERS

NEW YORK (AFP) - Oil tumbled to near a six-year low Wednesday as US crude stocks soared to a record high, sparking fresh fears over the growing global supply glut.

US benchmark West Texas Intermediate (WTI) for March delivery dropped US$1.78 to US$44.45 a barrel on the New York Mercantile Exchange, its lowest close since March 2009.

European benchmark Brent North Sea crude for March delivery lost US$1.13 at US$48.47 a barrel in London.

Data showed that US crude supplies surged 8.9 million barrels to 406.7 million in the week ending Jan 23, according to the US Department of Energy.

That was the highest level since the US government began keeping weekly records in 1982.

It is also above monthly data since April 1931.

"It's not a pretty picture," said Bart Melek, head of commodity strategy at TD Securities.

"We're seeking bottom but I don't think we're there yet."

The oil market has collapsed by more than 50 per cent since June, plagued by plentiful crude supplies, weak global demand and the decision of the Organisation of Petroleum Exporting Countries to let prices fall.

"If proof were needed that oil prices remain constrained by too much supply, this afternoon's US inventory data confirmed it," said CMC Markets analyst Michael Hewson.

"As such, prices could well have further to fall with prospects of a drop below US$40 a barrel becoming a reality in the short to medium term."