The price of oil rebounded on Thursday after heavy selling had plunged the price of crude to its lowest closing level below 23 dollars a barrel in the previous session.
A barrel of Brent North Sea reference crude for February delivery picked up to 23.80 dollars, after plummeting to 22.97 dollars at Tuesday's close -- a level not seen since mid-April.
In New York, the light sweet crude February contract fell by eight percent on Wednesday to 25.77 dollars a barrel.
The falling prices came as a result of the latest figures for US crude reserves that showed that stocks swelled by 3.1 million barrels last week.
"There has been some building in US crude stocks, but this is a fall in prices ahead of a shift in the fundamentals," said Prudential Bache brokerage analyst Christopher Bellew.
"The pattern has been steep sell-offs at the close. The extra thing tipping the balance have been investment funds selling as the price falls lower. It's self perpetuating."
Oil prices have now tumbled 10 dollars -- around 30 percent -- this month alone after a year of soaring prices.
Market perceptions have shifted radically from concern that oil supplies would fail to meet the heavy demand of a northern hemisphere winter, to fears that there might actually be too much oil sloshing around on the market.
The Organization of Petroleum Exporting Countries (OPEC), which increased output four times this year to coax prices down, is now thinking of cutting production at a January meeting to reverse the trend.
"The market is now building in an expectation that OPEC will cut output by half a million barrels a day, but if prices go lower than 22 dollars it could be more," said Bellew -- LONDON (AFP)
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