Investing.com - Brent oil prices fell to the lowest level since July 2004 on Wednesday, as worries over the health of the global economy added to the concerns that a global supply glut may stick around for longer than anticipated.
On the ICE Futures Exchange in London, Brent oil for February delivery dipped 70 cents, or 1.94%, to trade at $35.72 a barrel as of 08:48 GMT, or 3:48AM ET, after sinking to $35.54, a level not seen in more than a decade.
A day earlier, London-traded Brent futures lost 80 cents, or 2.15%, as ongoing concerns over a global supply glut outweighed heightened geopolitical tension between Saudi Arabia and Iran.
Elsewhere, crude oil for delivery in February on the New York Mercantile Exchange shed 44 cents, or 1.21%, to trade at $35.53 a barrel, the lowest since December 21, when prices hit a six-year trough of $34.29. On Tuesday, Nymex prices slumped 79 cents, or 2.15%.
Both benchmarks are down nearly 4% so far this week.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
After markets closed Tuesday, the American Petroleum Institute, an industry group, surprised market participants and said that U.S. oil inventories fell by 5.6 million barrels in the week ended January 1.
But the report also showed a 7.1-million-barrel increase in gasoline stocks and a 5.6-million-barrel rise in distillate inventories.
The U.S. Energy Information Administration will release its own weekly report on oil supplies at 10:30AM ET Wednesday.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at 19 cents, compared to a gap of 45 cents by close of trade on Tuesday.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.
Most market analysts expect a global glut to worsen this year due to soaring production in Saudi Arabia and Russia.
Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.