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Oil plunges as market fails to find bottom

A worker for Raven Drilling, helps line up a pipe while drilling for oil in the Bakken shale formation outside Watford City, North Dakota.
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Oil futures fell sharply, failing to hold a rally for a second day and signaling traders that the selling is not over.

Oil traded wildly in a big wide 8 percent intraday swing, the day ahead of the expiration of the January futures contract at the Nymex. West Texas Intermediate futures for January were up as much as 4 percent before turning lower, to settle down 4.2 percent at $54.11 per barrel, a fresh five-year low. Brent was trading below $60 after being up 4 percent earlier in the day.

"We're in contango, and we have weak cash prices. The downward pressure as you get to expirations gets intense," said John Kilduff of Again Capital. "These are what bear markets look like. When you recall the bull markets of the past years, this is the same thing that happened on the upside."

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