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US oil prices sink further to below $27

New York – Oil prices plunged again on Wednesday, losing 6.7 percent in New York in the absence of any sign of tightening of supplies and amid gloomy global economic forecasts.

The US benchmark West Texas Intermediate (WTI) for February delivery dropped $1.91 to $26.55 a barrel, the lowest level since May, 2003. The contract traded as low as $26.19 a barrel during the session, the last day for the February contract.

Losses also persisted in London trade, but were not as heavy as Brent North Sea crude for March delivery tumbled to $27.88, down 88 cents from Tuesday.

Wall Street stocks tumbled Wednesday as US oil prices sank to fresh 12-year lows, but an afternoon rally significantly cut the session’s losses.

The Dow Jones Industrial Average lost 249.28 points (1.56 percent) at 15,766.74.

The broad-based S&P 500 fell 22.00 (1.17 percent) to 1,859.33, while the tech-rich Nasdaq Composite Index dipped 5.26 (0.12 percent) to 4,471.69.

The market is still in the process of finding a bottom, said analyst Oliver Sloup at iiTrader.com.

Sloup said the end of the WTI February contract could have exacerbated the losses and that could lead to a rebound with the new March contract.

“In the past when we’ve seen the futures contract go off the board, we’ve actually seen a short-term bottom in the market. So we wouldn’t be surprised to see a little bounce.’’

“You might get some bargain buyers, but for the most part a lot of traders are just sitting on their hands waiting to see a base form.’’

Also influencing trade was the expectation that the US weekly crude and fuels stockpiles report could show another significant rise – more oversupply – when it is released on Thursday.

“That’s why the market is under pressure. But if we come in with a smaller build than anticipated, that could also help support prices,’’ Sloup said.

James Liu, global market strategist for JPMorgan Funds, said demand for oil hasn’t fallen off and the global economy remains relatively healthy. But companies are still producing a great deal of oil, so tremendous stockpiles have accumulated. While companies started shutting down drilling rigs and wells in late 2014 after prices started to decline, production of oil didn’t change much.

Liu predicted production will keep falling and oil prices will stabilize in the middle of 2016, then start rising. “I think that will alleviate some market concerns,’’ Liu said.