Fresh oversupply concerns and waning international demand has pushed crude near bear market territory.
Oil has fallen nearly 20 per cent since hitting a year-high above $52 per barrel in June, when it was buoyed by unexpected supply outages in countries across the world.
Brent crude, the global benchmark, fell 0.97 per cent to $43.05 per barrel today. West Texas Intermediate crude, the US benchmark, slipped 0.93 per cent to $41.53, reversing direction after hitting $42.22 earlier in the day.
Oil extended losses after energy market data service Genscape revealed a large inventory build at the widely-watched Cushing storage facility in the US, Reuters reported. Prices have become sensitive to such developments amid concern that the market recovery is slowing.
A bear market is usually when an asset declines 20 per cent from its peak, within a two-month period.
Oil has fallen this week due to fears over rising supply from the Organisation of Petroleum Exporting Countries, as well as a glut of crude products.
The strong US dollar, coupled with global growth concerns emanating from the UK's decision to leave the European Union have also weighed on crude.
Lukman Otunuga, a research analyst at ForexTime, warned that the black stuff could fall even further in the near future.
"Prices remain fundamentally bearish and the horrible combination of excessive supply coupled with fears of slowing demand could encourage a selloff towards $40."
“With the dollar strengthening amid rising US rate hike expectations, this could cap future upside gains on WTI Crude.”
However, Richard Mallinson, geopolitical analyst at Energy Aspects, told City A.M. earlier this week that the sombre sentiment doesn't mean “the rebalancing has stopped”.
He said that “supplies outside of Opec are falling rapidly [and ]we’re still seeing healthy demand growth”.
“Towards the end of this year we’ll see refineries coming back, purchasing more and prices moving upwards again,” he added.