By Georgi Kantchev 

LONDON--Oil prices extended their slump into the new week hovering around 5 1/2 year lows as Greece's elections added to uncertainty in Europe and there was little evidence of a change in Saudi Arabia's oil policy.

Crude has fallen more than 55% since last June as ample supply met tepid demand for the commodity, particularly in Europe.

The Saudi-led Organization of the Petroleum Exporting Countries resisted cutting its output, despite the price rout, in a bid to defend its market share against the booming U.S. shale industry.

Brent crude for March delivery fell 1.5% to around $48 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, WTI futures flirted with $45 a barrel, down $0.60 from Friday's settlement.

Greece's radical antiausterity Syriza party won Sunday's vote and raised the specter of uncertainty in Europe. The euro hovered around multiyear lows exerting pressure over dollar-denominated commodities like oil.

"Yesterday's Greek elections are likely to heighten volatility across all asset classes," JBC Energy said in a note.

Nymex WTI crude lost 7.2% last week, settling at its lowest value since March 11, 2009. The contract has been down for 15 of the past 17 weeks. Brent crude, the global benchmark, lost around 2.8% last week.

Oil prices continued their rout as Saudi Arabia's new King Salman showed little sign of changing the country's oil policy, keeping the influential oil minister Ali al-Naimi in his job. "It looks as if Saudi Arabia will continue to flood the market with oil and attempt to crowd U.S. shale oil producers out of the market by driving down prices," Commerzbank said in a note.

Analysts, therefore, expect more short-term pain for oil markets as there is little evidence that there will be a change in supply and demand fundamentals.

"There is still more downside risk to oil prices, notably as U.S. oil supply continues to grows unabated in the first half of the year and that OPEC maintains the status quo on its production policy," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas. "As we transition from Q1 to Q2, that is when the down side risk to oil prices is the greatest as demand seasonally weakens with the end of winter and U.S. refinery maintenance gets under way, cutting into crude oil demand."

Shale oil players could still be viable at an oil price of as low as $30, Morgan Stanley said. But the bank cautioned that lower prices should limit cash flow and spending and restrict access to capital for oil producers.

The oil rig count in the U.S. declined by a further 49 last week, according to data by Baker Hughes. The number has fallen by 165 since the beginning of January, which is the sharpest three-week reduction since 1987, Commerzbank said.

"For a short period of time, the significantly higher oil production starting level will prevent output from falling, yet the oil rig count is set to dwindle further in the coming weeks, so it is only a question of time before this is reflected in decreased oil production," the bank said. "This indicates that prices will recover in the second half of the year."

Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--fell 1.4% to $1.3276 a gallon, while ICE gas oil for February changed hands at $473 a metric ton, down $4 from Friday's settlement.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

Eric Yep contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

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