Brent hits 11-year low as oil extends slide

Oil prices continue their decline in late 2015 in anticipation of growing oil supplies on the market.

Russia’s 2016 budget bill, signed by President Vladimir Putin on Dec.15, projected the average price of Russian Urals oil at $50 per barrel in the next year.

Brent for February settlement slid as much as 83 cents to $36.05 a barrel on the ICE Futures Europe exchange, the lowest level in intraday trade since July 2, 2004.

“It’s not a magic number”, Mark said, adding his firm doesn’t get into the game of speculating on a floor price.

USA crude futures dropped 31 cents to $34.42 a barrel, their lowest since 2009.

International Brent crude fell to an 11-year low on Monday as market fears over oil storage capacity emerged amid speculation that a new peace accord in Libya could help bolster crude production there.

Lower oil prices are dragging on corporate profitability, with most major oil and gas companies cutting spending plans for 2016. China, the largest importer of crude oil, profits from declining oil prices too.

In November, the 12 members of Opec maintained production at 30 million barrels per day, as first agreed in December 2011.

Global oil production is running close to record highs. Japan’s Nikkei stock index ended 0.4 per cent lower but pared most of its early losses after falling 1.8 per cent at one point, with a pick-up in the dollar against the yen providing some respite for exporters.

Opec said this month it had no plans to rein in production – a stance reiterated by Iraq’s oil minister at the weekend.

Beyond the unexpected gain in the USA oil rig count by 17 to 541, the strength in the US dollar following last week’s interest rate hike – which makes oil more expensive for countries using different currencies – also weighed on prices.

It now pumps more than 10 million barrels a day, the most since the collapse of the Soviet Union.

To crown it all, the supply of oil in the coming months is expected to grow because of Iran, as the country prepares to return to the market after the lifting of sanctions.

US crude oil prices have moved into a premium over internationally traded Brent as an unexpected drop in American inventories tightened the system, while global markets still suffer from ballooning oversupply.