Oil prices slumped as the glut worsen

January Brent crude LCOF6, -0.47% on London’s ICE Futures exchange, however, settled at $37.92 a barrel, down by a penny to hold at its lowest level since December 2008.

The Organization of the Petroleum Exporting Countries (OPEC) is one reason for oil’s most recent downturn.

“Land storage capacity is now limited but OPEC keeps increasing production so the oil price is relentlessly trending down”.

He said during his life he has seen six oil cycles of high and low prices. The European benchmark crude closed at a US$1.61 premium to WTI, the least since Jan 21.

However, analysts said the deal has little effect on oil prices in the near term, because it is still uncertain how the agreement will be implemented.

“If you want to prevent gasoline prices from going back up, vote for this bill”, Barton said.

Low prices, now a lot of people are saying is good for the consumers. OPEC set an output quota and abandoned production limit at a December 4 meeting.

Indeed, some banks are now holding a more bullish view on the crude market.

Investors were likely reacting to the release of the International Energy Agency’s (IEA) final Oil Market Report of the year, which indicated that global demand growth of 1.2 million barrels a day (mb/d) is forecasted in Q1 2016, down from a peak of 2.2 mb/d recorded in Q3 2015. Its market capitalization has now reached to $2.18 billion and analysts have a consensus target price of $19.00 in the 12-month period. “Our general assumption is on a market with low prices, so the price can drop as low as possible as we are prepared for the worst scenario”, the official said.

“For OPEC, we still can produce with the current price”, he said.

This marked a fifth straight week of declines that left their net long position in USA crude at 46,919 contracts, the lowest since the CFTC created the managed money category for oil in 2009.

He said Opec does not have a target price but was looking for a fair value that meant “member countries can have a decent income and also where we can invest to (provide) more supply to the consumers”. The world’s largest oil importer may be as big a factor as the Saudis. The OPEC member’s oil production has shrunk to about 375,000 barrels a day from 1.6 million a day before the 2011 rebellion that toppled Muammar Qaddafi.

A measure that would repeal the 1970s era ban on the exports of US crude oil is given a good chance of passing as part of the omnibus spending bill which is now making its way through Congress, News Radio 1200 WOAI reports.