Oil hits 11 year low,falls below U.S. $35 in US

Money managers including hedge funds have piled on bets that US oil prices could fall in recent weeks, according to the Commodity Futures Trading Commission.

Moody’s has lowered its price assumption in 2016 for Brent crude oil, the global benchmark, to $43 from $53 per barrel and for West Texas Intermediate (WTI) crude, the North American benchmark, to $40 from $48 per barrel.

Again Capital partner John Kilduff said the market might have found a bottom.

“I would be shocked by that (lower oil prices) but then we continue to be surprised by how low it goes”.

Brent for January settlement, which expires Wednesday, slid 24 cents to $37.68/bbl on the London-based ICE Futures Europe exchange. USA crude (CLc1) was up 60 cents at $36.91.

Oil prices erased early losses Monday after falling near their financial-crisis lows. There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, said Amir Hossein Zamaninia, the deputy oil minister for global and commerce affairs.

Oil prices have slumped to levels last seen during the global financial crisis as the Organisation of Petroleum Exporting Countries (Opec) effectively abandoned production limits to defend market share, fuelling a record surplus.

The API crude oil inventory is a precursor to the EIA’s (U.S. Energy Information Administration) weekly petroleum status report, which is scheduled for release tomorrow.

He also said the OPEC members – who in their last meeting refused to impose fresh production cuts to rein in the historic fall in prices – want neither a high nor a low price for their output.

“Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi Arabia”, Morgan Stanley analysts said in a research note Monday, adding that OPEC supply is likely to increase by a million barrels per day next year. Oil markets usually see strong demand towards year end as the northern hemisphere enters its peak winter heating demand season.

With OPEC pumping strongly and US drillers producing large amounts of crude, the Brent/WTI premium has shrunk 28 percent in one week to $1.95 per barrel.

A major reason for the momentum is the fact that gasoline prices are down by half since peaking in 2008 at $4.00 US per gallon. Brent oil prices are on track to post an annual decline of 33% in 2015, as oversupply concerns dominated market sentiment for most of the year.