Brent oil dips below $39 a barrel to a seven-year low

The report suggested that prices would remain low till the end of next year, as the Organization of Petroleum Exporting Countries continues pumping oil into an already oversupplied market. Early indicators for the fourth quarter of this year show growth easing to 1.3 million barrels a day, from a peak of 2.2 million barrels in the previous quarter.

The Paris-based agency delivered more bad news to battered oil producers, who have seen prices slump below $40 (U.S.) per barrel and hit their lowest point since the deep global recession of 2008-09.

OPEC in November 2014 vowed to keep production steady despite the rise of USA shale oil production, maintaining market demand would eventually return. Its output, however, fell in October by 195,400 barrels a day as storms delayed the country’s main terminal in the south.

But Capital Economics consultancy saw a silver lining in the gloom, saying the oil slide was “the damning verdict on OPEC’s failure to agree on a number even for what is largely a notional output target”.

It’s been a nervous week on the world markets with commodities still underperforming and the oil price at a 7-year low.

Oil sold off steadily during European trading, and the losses accelerated after 9 a.m.in NY, a time when trading in the USA market typically takes off.

USA benchmark West Texas Intermediate (WTI) for delivery in January dived to 36.12 – last witnessed in February 2009.

As of 10:13 front month Brent crude futures were 1.25% lower to $39.24 per barrel on the ICE.

With OPEC’s output at its highest since 2012, the organisation issued its final monthly report for the year on Thursday. This leaves the United States caught betwixt low energy prices which should well boost economic expansion…while global economic weakness and a stronger dollar provide headwinds.

“Low world oil prices will likely to accelerate the decline of Azerbaijani oil in 2016 compared to 2015”, OPEC considers.

Oil prices are off dramatically since OPEC’s meeting last week, with Brent losing more than 8 percent. OPEC production remains steady and the market is now oversupplied by about 2m barrels a day.

The report also said OPEC members pumped more oil in November, adding to a supply glut, and forecast global oil demand growth would slow next year.

The agency’s executive director, Fatih Birol, said this week that he expected prices to remain under pressure throughout next year. Non-OPEC supply totaled 58.5 million barrels a day in November, but annual growth has slowed from 2.2 million barrels a day at the beginning of 2015 to less than 300,000 barrels a day.