A gasoline pump is seen hanging at a petrol station in central Seoul
Crude prices end nearly 50% lower in 2014REUTERS

Crude prices declined to new lows on 31 December as data from China confirmed weakening domestic demand in the world's second largest economy, offsetting the positive price impact of the supply disruptions reported in Libya.

The final HSBC/Markit manufacturing purchasing managers' index came at 49.6 for December, down from 50 in November. It was for the first time since May, the PMI fell below 50, the level that separates expansion from contraction.

"The weaker PMI reading was partly a result of a renewed fall in new business volumes and it was the first reduction since April. Data suggested that the decline was largely driven by softer domestic demand, as new export work rose for the eighth month in a row and at a slightly quicker rate than in November," the Markit press release showed.

The West Texas Intermediate (WTI) category of crude for 15 February delivery fell to $53.25/barrel on Wednesday, its lowest since May 2009. The commodity is set to end the year more than 46% down, with a near 50% drop in the second half.

China is the world's second largest oil consumer and a weak activity outlook from there will therefore weaken demand outlook for commodities as well.

Analysts, however, see further weakening of the China situation as supportive for commodities as such a scenario might prompt the Chinese authorities to announce fresh stimulus measures, boosting the overall economic activity.

A fire raging for almost a week at Libya's biggest oil port of Es Sider has destroyed up to 1.8 million barrels of crude and damaged seven storage tanks, top oil official al-Mabrook al-Buseif said on Tuesday, Reuters reported.

The turmoil in Libya has caused Opec's oil supply to shrink 270,000 barrels per day (bpd) in December to a six-month low below Opec's target of 30 million bpd, the news agency said.