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By Bloomberg

Oil’s seven-day slump to the lowest level in six years is poised to drive prices back into a bear market as record U.S. stockpiles worsen a global supply glut.

Futures fell as much as $1.02 to $42.44 a barrel in New York. A close at this level would be 20 percent below its peak last month, meeting a common definition of a bear market. Crude inventories probably expanded by 4.4 million barrels to 453.3 million last week, according to a Bloomberg News survey before government data on Wednesday. Supplies increased by 10.5 million barrels, the industry-funded American Petroleum Institute was said to have reported.

Oil has renewed its collapse after losing 50 percent in 2014 amid speculation that a slowdown in U.S. drilling isn’t enough to shrink a global oversupply. Options traders have become the most bearish in at least five years amid signs that rising stockpiles may strain the nation’s storage capacity.

“The ongoing deterioration in the supply-demand picture continues without any sign of interruption,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “With concerns about the demand side of the equation, it looks like we’re heading toward $40 in the next couple of sessions.”

West Texas Intermediate for April delivery was at $42.66 a barrel in electronic trading on the New York Mercantile Exchange, down 80 cents, at 1:30 p.m. Singapore time. The contract dropped 42 cents to $43.46 on Tuesday, the lowest close since March 2009. A settlement at $42.82 or lower would be 20 percent below this year’s high of $53.53, pushing crude into a bear market. The volume of all futures traded was about 2 percent above the 100-day average.

U.S. Supplies

Brent for May settlement slid as much as 33 cents, or 0.6 percent, to $53.18 a barrel on the London-based ICE Futures Europe exchange. It decreased 43 cents to $53.51 on Tuesday. The European benchmark crude traded at a premium of $8.72 to WTI for the same month.

U.S. crude inventories have gained for nine weeks through March 6 to 448.9 million barrels, the most in weekly Energy Information Administration data dating back to August 1982. Production accelerated to 9.37 million barrels a day, the fastest pace since at least January 1983, according to the Energy Department’s statistical arm.

The nation’s oil output will probably start contracting by the end of the year because some companies can’t continue to operate at current price levels, Vitol Group’s Ian Taylor said in Cape Town on Tuesday. The chief executive officer of the world’s largest independent oil trader predicted no return to $100 a barrel within three years.

Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, climbed by 3 million barrels last week, the API in Washington reported, according to a person with knowledge of the data.

WTI’s 14-day relative strength index is at 31.5, the lowest level since Jan. 15, data compiled by Bloomberg show. A reading below 30 typically signals the market is oversold.