A Chinese stock market rout and continued concerns over an oil supply glut sent West Texas Intermediate prices crashing down to $39 per barrel, the lowest price since 2009.
WTI prices tumbled 3.51 percent and was trading at $39.03 per barrel Monday morning, while Brent crude prices slipped 3.89 percent to $43.69 per barrel.
The price drop was driven in part by an 11 percent stock market rout in Beijing last week.
“It is a China driven macro panic. Volatility will persist until we see better data there or strong policy action through forceful monetary easing,” chief investment officer at ABN Amro Didier Duret told Reuters.
Traders had expected an oil stock drawdown this week but the U.S. Energy Information found that supplies grew by 2.6 million barrels last week to 456.21 million barrels.
According to the EIA, continued growth in global production of petroleum and other liquids has outpaced consumption growth since August 2014, causing global liquids stocks to rise.
Total global liquids inventories are estimated to have grown by 2.3 million barrels per day during the first seven months of 2015, the highest level of inventory builds through July of any year since 1998, the EIA added.
In its latest short term energy outlook, the EIA found that U.S. crude production declined by 100,000 barrels per day in July compared with June.
Production is expected to continue decreasing through mid-2016 before growth resumes in late 2016.
“These strong inventory builds have put significant downward pressure on near-term crude oil prices,” the EIA said.
U.S. gasoline futures slipped 6 percent to a six month low despite a larger than expected fuel stockpile dip.
According to Reuters, U.S. fuel stockpiles fell 2.7 million barrels compared to a 1.6 million barrel drop anticipated by analysts.