USA crude oil holds near 2009 lows as global glut persists

The Paris-based agency said that global demand growth is forecast to slow to 1.2 million barrels a day in 2016 after surging to 1.8 million barrels a day this year as support from sharply falling oil prices begins to fade.

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.

Brent crude for delivery in January slipped to $38.97 a barrel this morning before tracking back up to around $39. It extended its fall in post-settlement trade, striking a new February 2009 low of $39.46 by 4:00 p.m. EST (2100 GMT).

The Organisation of the Petroleum Exporting Countries reported its collective production rose by 230,100 barrels a day in November to 31.7 million.

Overnight, crude futures plunged to fresh seven-year lows after OPEC reported on Thursday that it pumped oil at its highest level in more than three years in November, exacerbating longstanding concerns related to the excessive supply glut on global energy markets.

Crude inventories fell 3.6 million barrels in the week to December 4, compared with analysts’ expectations for an increase of 252,000 barrels, U.S. Energy Information Administration (EIA) data showed.

Oil slumped to a six-year low below US$40 a barrel in London after OPEC, which controls about 40% of world supply, said it would keep pumping in excess of its old production limit.

One hundred and eighty-five years after the birth of American poet Emily Dickinson, and OPEC has been waxing lyrical today in its latest monthly oil report.

“If the average price for oil remains at US$20 per barrel for 2016 and 2017, we are expecting the government’s petroleum-related revenue will fall from the current expected value of RM31.7 billion to RM22 billion in 2016 and fall further to RM9 billion in 2017”, he said. Several of the oil cartel’s members, notably Iran and Iraq, are looking to boost output as they emerge from sanctions and conflicts.

“As companies make further spending cuts in reaction to sub-$50/bbl oil, the impact on supplies – both from non-OPEC and OPEC – will be even more pronounced in the longer term”, the agency said. Meanwhile, oil output in the United States, a strong competitor of OPEC, could continue to decline in 2016 possibly causing oil prices to rise in the second half of that year, he stated.