4 reasons crude-oil prices are in a nasty death spiral-again

The prices of crude oil stayed at levels which are not seen since early 2009, as the output in the Middle East continued to increase, despite of huge oversupply.

Non-OPEC supply will fall by 380,000 barrels a day next year to 57.14 million, with an expected contraction in the USA accounting for roughly half the drop, the organization said.

The Organisation of the Petroleum Exporting Countries earlier this month failed to reach any agreement to restrain production, leaving members to continue pumping crude at near-record levels into an already oversupplied market.

About 1230 GMT, US benchmark West Texas Intermediate for delivery in January was trading 37 cents higher at $37.88 a barrel.

The price of a barrel of the commodity over the weekend fell below 40 dollars, the lowest since 2009.

Analysts are blaming rising oil production, largely by OPEC member states, for the falling prices.

As per the Iran oil minister, Bijan Namdar Zanganeh, production will likely increase by 500,000 barrels a day within a week after the relaxation in sanctions and by 1 million barrels a day within a month.

WTI has lost around one tenth of its value since last Friday and more than 60% since hitting recent peaks above $100 in summer 2014.

After the “tremendous” growth of 2.23 million barrels per day last year, the group now expects growth this year to have been a “much slower” 1 million – but up from its previous projection of 280,000 barrels.

That was comfortably above the 31.3 mb/d which the IEA said the cartel of oil producing countries needed to provide – the “call on OPEC crude and stock change” – in 2016 in order to stabilise demand and supply.

Driven by cartel kingpin Saudi Arabia, this strategy is aimed at maintaining market share and squeezing out USA producers of shale oil, whose output has boomed in recent years but which need a higher oil price to make money.

OPEC left its 2016 oil demand growth forecast unchanged, predicting global demand would rise by 1.25 million bpd, marking a slowdown from 1.53 million bpd in 2015.