Oil prices fell further below $40 in Asian trade today in a market plagued by weak energy demand, dealers said.
New York's main futures contract, light sweet crude for delivery in February, shed 77 cents to $39.14 a barrel in morning trade after sliding $2.45 to close at $39.91 on the New York Mercantile Exchange yesterday.
Brent North Sea crude for February fell 42 cents to $41.03 a barrel. The contract dropped $2.55 to $41.45 in London yesterday.
"The market is in freefall," said Mark Pervan, senior commodities analyst with ANZ bank in Melbourne.
He said current prices confirm global weakness in oil demand.
Crude futures have collapsed since striking record highs above 147 per barrel in July, as a sharp global economic slowdown slashes the world's demand for energy.
Pervan added that the recent rise in oil stocks in the United States caused New York prices to fall below their Brent counterpart in London, which is unusual.
"The Americans are storing oil now, and will sell it again in two to three months' time... When prices are better," he said.
Oil reserves in Cushing, Oklahoma, where light, sweet crude oil is stored, are at maximum capacity.
"Part of the reason why (New York crude) is trading at such a discount to Brent is down to the increase in crude oil stocks at Cushing, Oklahoma," said analysts at the John Hall Associates energy consultancy.
In a fresh sign of worldwide economic weakness, Japan's Toyota auto company on Monday forecast its first operating loss since it started reporting annual earnings in March 1941.
