Crude prices drop amid ample supplies

General weakness In an indication of market battle, Saudi Arabia was shipping more crude to Asia over the last two months of the year, trade sources said.

Iran hopes to increase its production by another 1 million barrels a day as Western economic sanctions are lifted under a July nuclear accord with world powers. However, in a fight to defend its market share against non-OPEC producers, such as the United States, the group chose to keep on pumping the markets with their oil, while demand remains low.

Brent crude oil, which was trading at about $US115 a barrel in June a year ago, hit a low of $US39.81 a barrel overnight Tuesday Australian time, breaching the $US40 mark for the first time since February 2009.

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However he says this week’s low oil prices won’t make a lot of difference to energy companies that have already made cutbacks or dropped projects. According to banks such as Goldman Sachs, that scenario is becoming increasingly likely as global oil stockpiles are bursting at the seams, with some even predicting the world is close to running out of storage space. The group left their production targets ofat 31.5 million barrels per day unchanged despite the price crash. West Texas Intermediate (WTI) crude oil prices is forecast to average $4 lower than the Brent price in 2015 and $5 lower in 2016. It had been expected to soften its stance at a meeting in Vienna last week, but member nations could not agree on a deal to cut production.

On Wednesday, the US Department of Energy will release its weekly inventory and production data.

The selloff in crude extended to ultralow sulphur diesel, also known as heating oil HOc1, and gasoline RBc1, pushing those refined fuels near seven-year lows.

This week, the price for the global benchmark, Brent, crashed below $40 per barrel for the first time since 2009 as markets recoiled in the wake of last week’s fractured end to a policy meeting for members of the Organization of Petroleum Exporting Countries. With the latest drop, and the fact that the prices have plummeted by over 50 percent during the year, there is now little expectation that prices will go above $50 dollars before mid-2017.

The US EIA’s short-term energy outlook confirmed that oil production seems robust at the current edge, (growing production in the Gulf of Mexico factors in), and therefore raised its production estimate for the current year again slightly.