Oil breaks below $49 for first time in 2017 (MarketWatch)

Sara Sjolin / MarketWatch

Oil prices suddenly turned sharply lower in Thursday trade, pushing West Texas Intermediate crude below $49 for the first time this year and toward its lowest close since late November.

Oil traders struggled to find a clear catalyst behind the move. But Ole Hansen, head of commodity strategy at Saxo Bank, said the drop came as traders stopped betting oil prices will go higher and sold out of their long positions.

“The market psychology has changed, with longs now looking to reduce or get out. They were looking for a bounce to sell into, but as it failed to materialize, they resumed selling. Some short-term buyers looking for a bounce stopped themselves out once it broke below $50,” he said.

If crude breaks a key resistance level of around $47.18, prices could sink back to the November low of $42.20 a barrel, he added.

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