Oil prices sank to fresh five-and-a-half-year lows yesterday, extending losses after a five per cent plunge in the previous session as worries over a global supply glut intensified.

Brent crude fell by three per cent to below $52 a barrel as cuts to monthly oil selling prices for European buyers by top Opec producer Saudi Arabia heightened worries about oversupply.

“Saudi Arabia is showing no signs of pulling back,” said Bjarne Schieldrop, chief commodity analyst with SEB in Oslo. “Stocks are continuing to build.”

A drop of diesel is seen at the tip of a nozzle after a fuel station customer filled her car’s tank. Photo: Yves Herman/Reuters

While Saudi Arabia increased its selling price to Asia, some analysts said the cuts to Europe reflect the kingdom’s deepening defence of market share.

This added to bearish data over the weekend showing that Russia’s 2014 oil output hit a post-Soviet-era high and exports from Iraq, Opec’s second-largest producer, reached their highest since 1980.

Yesterday, the UAE’s Abu Dhabi National Oil Company (ADNOC) set the December retroactive selling price for its benchmark Murban crude at $60.65 a barrel, its lowest level since May 2009.

“It’s hard to pinpoint a specific downward pressure,” Schieldrop said.

Brent crude fell as low as $51.23 a barrel yesterday, its lowest level since May 2009.

US crude was at $48.54, down $1.50, after falling to $48.47, its lowest since April 2009.

Jitters over political uncertainty in Greece added to an already faltering eurozone economy, raising questions about energy demand in Europe and compounding the bearish sentiment.

A slew of factors was keeping up the downward pressure on prices, analysts said, pointing to concerns about the Greek economy, high oil output from Russia, Iraq and the United States, and a stronger dollar.

“The weak euro should be one of the reasons,” said Tamas Varga of PVM, adding: “When the Saudis are cutting prices, the markets are not going to go higher.”

A rise in the dollar index for a sixth straight month in December has made dollar-denominated oil more expensive for holders of other currencies, depressing prices.

US commercial crude oil and products stockpiles were also forecast to have risen in the week ending January 2, a preliminary Reuters survey showed on Monday, which could weigh further on prices.

Some economists expect cheaper oil to boost consumers’ purchasing power and buoy the global economy, but the more-than-50-per cent plunge in oil prices since June has also raised deflationary fears.

“This is great news for motorists, but it presents a headache for policy makers, with the Fed keen to get their policy settings back to something more normal, and Europe keen to avoid a deflationary spiral,” ANZ analysts said in a note.