Brent oil plunges below $50 a barrel for first time since May 2009

Investing.com - Brent oil futures fell below the $50-per-barrel level for the first time in more than five years on Wednesday, as ongoing concerns over a glut in global supplies drove down prices.

On the ICE Futures Exchange in London, Brent oil for February delivery hit a low of $49.96 a barrel, a level not seen since May 2009, before trading at $50.13 during European morning hours, down 97 cents, or 1.91%.

A day earlier, London-traded Brent prices tumbled $2.01, or 3.78%, to close at $51.10 a barrel.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in February lost 67 cents, or 1.39%, to trade at $47.27 a barrel, after falling to a session low of $47.09, the weakest level since April 2009.

On Tuesday, Nymex oil futures plunged $2.11, or 4.22%, to settle at $47.93 a barrel.

London-traded Brent prices lost nearly 48% in 2014, while WTI futures dropped almost 46% after the Organization of Petroleum Exporting Countries decided to maintain its output target at 30 million barrels a day.

The decision disappointed hopes the oil cartel would lower production to support the market, as a surplus develops amid the shale boom in the U.S., which is pumping at the fastest pace in more than 30 years.

The US dollar index, which measures the greenback against a basket of six major currencies, climbed to a nine-year high, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.

Appetite for riskier assets weakened amid uncertainty over Greece’s future in the euro zone if left-wing anti-austerity party Syriza win elections due to be held on January 25.

Oil traders awaited the release of weekly supply data out of the U.S. later in the session to gauge the strength of oil demand from the world’s largest consumer.

Wednesday’s government report was expected to show that U.S. crude oil stockpiles rose by 0.9 million barrels last week, while gasoline stockpiles were forecast to increase by 3.4 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 4.0 million barrels in the week ended January 2.

The report also showed that gasoline stockpiles increased by 6.9 million barrels, while distillate stocks expanded by 9.1 million barrels.