U.S. benchmark West Texas Intermediate for January delivery fell 35 cents to $37.16 a barrel on the New York Mercantile Exchange, the lowest close since February 2009.
“In particular, we see potential for a temporary undershoot by prices to 2008 financial crisis lows around $36 per barrel for Brent”, it added.
Output from OPEC rose in November by 230,100 barrels per day to a daily total of 31,695 million, which is its highest since April 2012.
Growth will evaporate completely early next year, with non-OPEC supply expected to fall by about 600,000 barrels per day in 2016, largely due to a decline in US shale production.
Crude oil prices slightly increased early on Thursday but global oversupply and availability of cheap crude continued to dominate the broader market, fresh stats released by U. S. Energy Information Administration (EIA) showed.
Non-Opec oil supply is estimated to shrink by 380,000 bpd to 57.14 million bpd in 2016, a downward revision for 250,000 from the previous estimate.
“The move appears to signal a renewed determination to maximize low-priced OPEC supply and drive out high-cost non-OPEC production – regardless of price”, the IEA said.
OPEC raised crude output to the highest in more than three years as it pressed on with a strategy to protect market share and pressure competing producers.
The International Energy Agency (IEA) has predicted that oil markets will remain oversupplied at least until the end of 2016 in the light of sluggish demand and OPEC’s failure to curb production. With U.S. output starting to fade, OPEC left policies more or less in place during last week’s regular meeting in Vienna. “There is unlikely to be any kind of “happy ending” for oil prices this year”.
“The oil sector is expected to stay under pressure in the near term… as output from global oil producers is likely to rise further in the future”, Aw added. Demand growth peaked at 2.2 million barrels a day in the third quarter, but there are preliminary signs that it has eased to 1.3 million barrels a day.