London: Oil tumbled on Tuesday to fresh 5.5-year lows, plagued by a supply glut, demand fears in the faltering global economy, and the strong dollar.
Crude futures were also hit as OPEC kingpin Saudi Arabia reportedly cut its European and US export prices in order to maintain market share.
US benchmark West Texas Intermediate for February tanked USD 2.29 to USD 47.75 a barrel, a low last witnessed in late April 2009.
Brent North Sea crude for delivery in February dived USD 2.15 to USD 50.96 per barrel, the lowest level since early May of the same year.
"The market is still worried that there are no signs that the supply glut will start falling," Nordea Markets analyst Thina Margrethe Saltvedt told a news agency.
"The excess supply comes on top of a persistent slowdown in global demand led by a weaker growth outlook in China, Japan and the European Union."
Saltvedt added: "The bearish market sentiment and high uncertainty characterising the market now, have led to a selloff".
Traders noted that Saudi Aramco, the kingdom's state-owned oil company, had this week cut its selling price for Arab light grade bound for Europe and the United States -- but lifted them for Asia.
"Saudi Aramco's pricing adjustments for February-loading crude barrels brought a set of heavy cuts for European buyers, contrasting with increases across the board for barrels going to Asia," said analysts at Vienna-based consultancy JBC Energy.
"European differentials have been moved to the lowest level in several years, more than wiping out the increases that had been made in prior months."
"We assess Europe as the region where Saudi crude has been the least attractive relative to regional competitors recently."
Oil had also collapsed yesterday, with New York crude breaching the psychological USD 50 mark for the first time since spring 2009. Over the day, WTI lost USD 2.65 and Brent shed a hefty USD 3.31.
