Oil prices plunged about 7 percent to a more than 15-month low on Tuesday as the United States and Russia continue to pump at record levels even as analysts warn that signs of faltering demand are emerging.
U.S. West Texas Intermediate crude ended the session down $3.64, or 7.3 percent, at $46.24. Losses accelerated ahead of WTI's settlement, with the contract closing at its lowest level since Aug. 30, 2017. U.S. crude fell 8 percent after the settle to a low of $45.79 a barrel.
Brent crude, the international benchmark for oil prices, fell $3.35, or 5.6 percent, to $56.26, a 14-month closing low. It fell to a low of $55.89 after the close.
Oil prices are now trading in a zone that could trigger a plunge towards U.S. crude's 2017 low near $42 a barrel, according to John Kilduff, founding partner at energy hedge fund Again Capital.
"There's not a lot of support on the chart between $48 and $42," he said. "Getting the close under $50 was very important on a technical basis. It just fed the negativity."
From peak to trough, WTI has lost 40 percent of its value since hitting a roughly four-year high in early October. The slump has brought WTI's year-to-date losses to more than 23 percent. Brent has fallen as much as 35 percent since its October high and is down about 16 percent in 2018.
U.S. crude futures fell sharply lower on Monday after energy data firm Genscape reported that crude stockpiles at a closely watched storage hub in the Cushing, Oklahoma rose by more than 1 million barrels.
Industry data from the American Petroleum Institute suggests total U.S. crude stockpiles rose by 3.5 million barrels last week, Dow Jones reported. More comprehensive government data will be released on Wednesday morning at 10:30 a.m. ET.
This month, oil output from U.S. shale fields is set to rise above 8 million barrels per day for the first time ever, the U.S. Energy Information Administration reported on Monday. Production from the seven key regions is forecast to rise by nearly 134,000 bpd in January, the biggest increase since September.
Meanwhile, sources tell Reuters Russia is pumping at 11.42 million bpd this month, a level that would mark an all-time high if confirmed.
Russia is the largest producer in an alliance of 10 oil-exporting countries that reached an agreement with OPEC to cut output earlier this month. The roughly two dozen producers began limiting their output last year in order to drain a global crude glut.