US crude tumbled below $27 a barrel in Asia Thursday as the oversaturated market struggled to cope with high inventories in the United States and an increased output from OPEC.
The decline came despite the weekly US Department of Energy report showing US oil stocks fell about 800,000 barrels for the week ending February 5, with traders seeing inventories still at high levels.
US benchmark West Texas Intermediate for March delivery was down 55 cents, or 2.0%, at $26.90 and Brent crude for April fell 32 cents, or 1.04%, to $30.52 a barrel at around 0215 GMT. WTI had dropped to $26.85 earlier in the session.
On January 20, WTI fell to a low of $26.19 a barrel before closing at $26.55 that same day, the lowest since May 2003.
"Given the falls that we have seen over the last three trading sessions, it is a little surprise to see such aggressive selling interest during our time zone," said Michael McCarthy, chief market analyst at CMC Markets in Australia.
"Given the short positions and the traders involved here, it is not impossible that this is an attempt to push it through the low and induce some technical selling," he said by telephone from Sydney.
Oil prices briefly rallied after the US commercial crude inventories report was released Wednesday.
However prices soon dropped back as traders took note of higher supplies of gasoline, a rise in stocks at the key Cushing, Oklahoma trading hub and a scant drop in oil production.
Analysts said sentiment was also marred by a report from the Organization of the Petroleum Exporting Countries that showed the cartel's production rose by about 130,000 barrels a day in January.
The Opec report followed a bearish outlook released Tuesday by the International Energy Agency, which predicted the global oil surplus would be larger than previously expected in the first half of 2016.