NEW YORK (Reuters) - Crude oil prices on tumbled on Monday, with global grades settling down more than $1 a barrel after an early rally fizzled and prices fell to their lowest levels since May 2009.
News of further damage Libya's oil infrastructure prompted the early rally that was quickly erased as pervasive fears of global oversupply trumped concerns about output curtailment from the OPEC producer.
Phil Flynn of Price Futures Group said the rally may have triggered sell stops. Then once the Brent dropped below $54, a previous low, more stops may have been triggered.
"It just shows you that the market is very heavy," Flynn said.
Global benchmark Brent crude LCOc1 settled down $1.57 at $57.88. U.S. crude settled down $1.12 at $53.61 a barrel, following Brent downward.
The rally followed by the steep drop showed the market's fears about oversupply are not going away, said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “Every time the market tries to pick itself up, it’s just another wave of selling,” he said.
The number of rigs drilling for oil in the United States dipped in the latest week, data from oil services firm Baker Hughes Inc BHI.N showed. But the count for U.S. oil rigs remained up from a year ago, indicating production would remain robust.
Oil tanks at Es Sider in Libya have been on fire for days after a rocket hit one of them, officials said.
The OPEC member nation is producing 128,000 barrels a day, an official said, down from the 1.6 million it produced prior to Muammar Gaddafi's ouster in 2011.
The market may test technical support at $50 a barrel, said Brian LaRose, a technical analyst at United-ICAP.
Flynn noted that trading was lighter than average. Nearly 400,000 lots of WTI crude oil futures traded on Monday, about a third less than the 30-day average but double Friday’s volume.
Oil prices this year are on track for the biggest decline since 2008 and the second-biggest annual fall since futures started trading in the 1980s.
OPEC has been reluctant to give up market share to boost tumbling oil prices, with Saudi Arabia stepping back from its historic role as a swing producer.
Additional reporting by Keith Wallis in Singapore and Simon Falush in London; Editing by Michael Urquhart, Jessica Resnick-Ault and David Gregorio