US crude oil dropped more than 9% to around $36 a barrel yesterday, for the soon-to-expire January futures contract, after Opec's record output cut failed to lift sliding prices.
West Texas light sweet crude is about $109 off its July peak, shedding value as a global recession erodes demand for petroleum products and other forms of energy.
The January contract, which expires today, settled $3.84 lower at $36.22 yesterday, its lowest price for four years.
With the January contract about to expire, analysts said the February price was a more accurate reflection of the futures market.
"WTI for January expires (today) and ... the expiring contract can go anywhere," said Olivier Jakob of Petroma-trix in Switzerland, referring to West Texas Intermediate, the type of crude oil used for contracts on the New York Mercantile Exchange.
"As a world benchmark, January WTI needs to be ignored and the focus kept rather either on February WTI or February Brent," Jakob said.
In London, February Brent crude fell $2.17 to $43.36 a barrel on the ICE Futures exchange.
The Organisation of the Petroleum Exporting Countries, which accounts for about 40% of global oil supply, on Wednesday made its third output cut since September to try to regain control of falling prices amid slackening demand.
But economists said there were doubts among market participants of Opec's ability to comply with this reduction given its magnitude and the fact that some of the group's member states pump more oil than their quoatas allow.
US crude for January delivery tumbled nearly 8% on Wednesday as traders dismissed the cartel's 2.2-million-barrel-per-day output cut, decided at the Algerian city of Oran.
US stockpiles of crude oil rose last week slightly more- that-expected, with deliveries at the Cushing, Oklahoma delivery point for physical barrels of light sweet crude showing a build of 4.7 million barrels. This increase, announced on Wednesday, continued to influence trading yesterday.
Meanwhile, China said it will cut domestic fuel prices today for the first time in almost two years to revamp its regulated pricing regime and revive growth.
The Chinese cuts of roughly 13% for petrol and 17% for diesel were brought forward from an expected January implementation by the National Development and Reform Commission. Petroleum analysts say cheaper fuel in China could stimulate demand and push up prices.
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