Oil prices tumbled on Thursday, as news of U.S. crude production rising to an all-time high added to worries of a new glut forming.
U.S. West Texas Intermediate crude futures for February delivery on the New York Mercantile Exchange fell $1.15, or around 2.2percent, to $51.16 a barrel by 8:20AM ET (13:20 GMT).
Brent oil for March delivery on the ICE (NYSE:ICE) Futures Exchange in London slumped $1.16, or about 1.9percent, to $60.16 a barrel.
Prices weakened after the U.S. Energy Information Administration (EIA) reported Wednesday that U.S. crude oil production reached a record 11.9 million barrels per day in the week ending Jan. 11, up from 11.7 million bpd a week earlier.
That increase threatens to nullify most of the effect of output cuts led by OPEC and Russia that were announced at the end of last year.
OPEC’s monthly report released earlier suggested that output from outside the group – notably from U.S. shale operators – will rise so much this year that the production cuts OPEC agreed recently with Russia and others will scarcely be enough to keep the global market in balance.
OPEC’s own oil output fell by 751,000 bpd to 31.6 million bpd in December, driven by a large decline in Saudi output and by supply disruptions in Libya and Iran.
Worries over a global economic slowdown, which some analysts believe will turn into a recession, also weighed on prices Thursday.