Brent crude oil hit a fresh five-year low today before rebounding to near $67 a barrel, as some buyers emerged in the hope that prices are bottoming following a more than 40% slide since June.
Fast-growing US shale output has hurt the ability of the Organisation of the Petroleum Exporting Countries to manage supplies.
This has sent prices sharply lower in anticipation of a large oil glut early next year.
Brent crude for January delivery was up 46 cents at $66.65 a barrel this afternoon after falling as low as $65.29, its weakest since September 2009.
Brent dropped 4.2% or $2.88 yesterday in its third-largest one-day loss this year.
US crude was up 64 cents at $63.69 a barrel, bouncing back after hitting $62.25, its lowest since July 2009. It fell 4.2% or $2.79 yesterday.
Commodity prices took some support today from a dip in the dollar, which slid by about 0.4% against a basket of currencies, though it remains more than 12% higher since May.
A weaker US unit makes commodities priced in the dollar cheaper for holders of other currencies.
Supply and demand will set the price of oil in coming months, an oil official from the United Arab Emirates said today, in the latest sign OPEC Gulf producers are ready to weather lower prices after declining to cut output last month.
Industry sources said top OPEC exporter Saudi Arabia would keep crude sales at full contracted volumes for Asian term buyers in January, while the head of Kuwait's national oil company said oil would remain around $65 for months.
Brent averaged around $110 between 2011 and 2013 and topped $115 in June.
Losses accelerated in late November after OPEC decided against reducing its output target, despite its forecasts of a surplus and calls from members including Iran and Venezuela to cut production.
Since then, Saudi Arabia and second-largest OPEC producer Iraq have cut monthly prices for the US and Asia, in a move some analysts say shows OPEC members are competing for market share.
New US projections show oil production from the big three US shale plays should grow by more than 100,000 barrels a day by January. However, many shale companies are starting to make deep cuts to spending for next year.
