LONDON: Oil prices fell close to $40 per barrel on Thursday, striking a new 6.5-year low on supply glut woes, before turning mixed.
US benchmark West Texas Intermediate for September delivery struck $40.21 per barrel, the lowest level since March 2009. It later rebounded slightly to trade at $41.04, up 24 cents from Wednesday's close.
Brent North Sea crude for October delivery meanwhile hit $46.31 a barrel, a point last seen in mid-January and not far off a six-year nadir. The contract later stood at $46.95, down 21 cents.
The market had fallen heavily on Wednesday and earlier on Thursday as a surprise rise in US stocks fuelled supply glut fears.
"WTI crude has clearly broken its low from earlier this year due to the relentless growth in supplies," said analyst Fawad Razaqzada at traders Gain Capital.
The US Department of Energy on Wednesday said oil stockpiles rose 2.6 million barrels in the week ending August 14, and reported a 300,000 barrel rise at the closely watched Cushing, Oklahoma, trading hub.
The surprise jump in inventories at a time when they normally fall added to concerns of a global surplus, particularly as signs emerge that demand is faltering in top energy importer China.
"US stockpiles unexpectedly expanded when the market was looking at a contraction, which heightened the global oversupply concerns," added IG Markets strategist Bernard Aw.
"This added pressure to crude prices, and we see WTI drop below $41, heading towards the key $40 level. We could see more downsides, given that the current conditions remain unfavourable to oil."
Citigroup said WTI could fall to $32 a barrel, a level not seen since the throes of the financial crisis, pressured by excess supplies.
"Oil balances point to further oversupply throughout 2015 begging the question how low can oil go," the US banking giant said in a market commentary, adding that hitting the 2008 low of $32.40 a barrel "is a conceivable reality."
However, Daniel Ang, an investment analyst with Phillip Futures in Singapore, said he expects WTI to be supported at $40 a barrel in Thursday's session.
"Technically, we are still seeing a very bearish momentum, however for prices to break below $40 is going to be an arduous task," he said.
"We see $40 for WTI to be a strong psychological support."
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