Oil prices tumbled towards six-year lows Tuesday on global oversupply and after OPEC kingpin Saudi Arabia said the era of $100 crude was over, analysts said.
Brent crude for February delivery fell as low as $46.40 per barrel -- the lowest since March 2009 -- and US benchmark West Texas Intermediate (WTI) for the same month hit a similar trough at $44.20 a barrel.
"Today a Saudi official reiterated the belief ... that the days of $100 oil are over," said analyst Daniel Sugarman at traders ETX Capital.
"It is unclear whether this is truly what is felt in the corridors of power in Riyadh, or just something intended to stress the firm resolve of OPEC’s leading member not to back down from its stance of no output reduction."
Global oil prices have slumped by almost 60 percent since June, as the market faced abundant supplies, demand fears and a strong dollar in a stuttering global economy.
The slide accelerated in November when the Organisation of Petroleum Exporting Countries maintained its production ceiling at 30 million barrels per day.
Venezuela, which wanted OPEC to cut production, on Tuesday saw Moody's slash the country's debt rating by two notches to "Caa3" saying its lost oil revenues had "clearly increased" the risk of bankruptcy.
For another major oil producer, non-OPEC member Russia, the plunging oil prices, coupled to Western sanctions over Ukraine, have hit its currency hard, with the ruble losing 41 percent against the dollar in 2014.
On Tuesday the ruble dropped around a further 5 percent.
In Scotland the energy minister appealed to the government in London to take measures to help the North Sea oil industry deal with "serious challenges" from the lower oil prices.
UAE seeks US output cut
The United Arab Emirates said Tuesday that the cartel could not stop world prices falling -- and called for a cut in booming shale oil output in the United States.
Analysts say that richer cartel members -- like the UAE and Saudi Arabia -- have been ready to accept the price fall in the hope that it will force higher-cost shale producers out of the market.
"We cannot continue to be protecting a certain price," UAE Energy Minister Suhail al-Mazrouei said.
"We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected," he told participants in the Gulf Intelligence UAE Energy Forum in Abu Dhabi.
The breakneck growth in shale oil output has made the United States a major producer again and has led to reduced need for crude imports from the Middle East.
Kuwaiti Oil Minister Ali al-Omair said meanwhile that "nobody can justify the drop now," but "we expect this situation to continue until the surplus on the market is absorbed and the world economy improves."
He said forecasts indicate that this will not happen before the second half of 2015.
Despite collapsing oil costs, Europe's main stock markets closed higher Tuesday on lingering hopes that the European Central Bank would implement quantitative easing (QE) stimulus to combat deflation in the eurozone.
UK facing deflation fears
In London, meanwhile, traders digested news that Britain's annual inflation rate halved to 0.50 percent in December from November.
That equalled the record low and sparked fears of deflation, a damaging and extended period of falling prices that undermines economic growth and is difficult to correct.
"The talk of full-blown QE from the ECB still echoes around trading floors, and European equity markets continue to cling on to the possibility of extra stimulus," said IG analyst David Madden.
"The dismal inflation figures from the UK prove that falling CPI is not just a eurozone problem."
London's benchmark FTSE 100 index closed up 0.63 percent to 6,542.20 points, while Frankfurt's DAX 30 climbed 1.63 percent to 9,941 points and the CAC 40 in Paris gained 1.47 percent to 4,290.28
Wall Street followed European equity markets higher Tuesday, surging after better-than-expected results from Alcoa kicked off the quarterly earnings season.
Around midday in New York, the Dow Jones Industrial Average was up 1.29 percent to 17,869.11 points.
The broad-based S&P 500 climbed 1.06 percent to 2,049.85, while the tech-rich Nasdaq Composite Index gained 1.60 percent to 4,739.17.
"European equity markets extended gains in today's trading session and managed to hold in positive territory despite the ongoing sharp sell-off in the oil market, as robust corporate earnings results from Alcoa spread a bullish tone across the global equity markets," said Myrto Sokou, senior research analyst at Sucden Financial.
In foreign exchange activity, the euro sank to $1.1753, it lowest since December 2005, before recovering to $1.1776, still down from $1.1834 late on Monday in New York.
On the London Bullion Market, gold rose to $1,231.50 an ounce from $1,226.50 on Monday.
By Roland Jackson (AFP)