Oil slid to a six-week low yesterday, continuing a fund-led selling spree that has knocked 13 per cent from last week's record highs as rising stockpiles have eased worries of a winter supply crunch.
US light crude fell 52 cents to $48.30, (€37.33) the lowest level since September 24th. London Brent crude fell 33 cents to $45.68 a barrel. US crude has now racked up more than $7 in losses in the last nine trading days from an all-time New York futures high at $55.67.
Rising crude and natural gas stockpiles in the United States and signs that high energy costs are hurting economic growth are gradually eroding a rally that had lifted prices more than 50 per cent this year.
Analysts are undecided whether the sharp recent decline marks a turning point, or just a correction to the year's breakneck advance. "We think that, despite the market's decline over the past week, we still may have lower to go, as we have not yet seen the heavy volume or serious drop in open interest that is a telltale sign of fund liquidation," said Man Energy's Mr Edward Meir.
Others were expecting firmer support from fundamentals. "Aggressive speculative shorting of the market is the main factor behind the recent price fall," wrote analysts at Barclays Capital.
"Gross short positions across crude oil, gasoline and heating oil contracts combined are close to their highest ever levels suggesting that there is a growing risk of a violent short-covering rally in oil."
The OPEC producers cartel, which controls more than half of world crude exports, has lifted production above 30 million barrels per day (bpd) to meet booming oil demand.
The group pumped 30.11 million bpd in October, down just 40,000 bpd on the month, a Reuters survey found this week.
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