Oil prices drop as OPEC output rises; Brent below $40

So, by the end of 2015 the demand for “black gold” in the world is expected to rise by 1.53 million bpd up to AZN 92.88 million barrels that is by 30,000 barrels more than the previous forecast.

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.

“Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2 million bpd in 2016, as support from sharply falling oil prices begins to fade”, the IEA said in its monthly report.

The Wall Street Journal notes that the November figures, which were driven mainly by record Iraq production levels of 4.3 million bpd, are further proof that OPEC “has no plans to slow down its furious output”.

OPEC predicts non-OPEC supply will fall by 380,000 barrels a day next year as the rest of the world reacts to continued low oil prices.

US oil companies are clearly hurting, but OPEC’s strategy to defend its market share by forcing others to close wells is causing pain for the cartel’s members too.

Analysts said a sharp fall in the dollar on Wednesday may also have spurred some buying as weakness in the U.S. currency makes dollar-priced oil cheaper.

Prices initially plummeted late last year amid a global oversupply of oil, which was exacerbated this year by weaker demand in sluggish economies such as China.

The news pushed oil prices back below $37 a barrel for the second time this week.

Oil prices have tumbled this month after to OPEC failed to impose a ceiling on its output.

OPEC’s report follows its acrimonious meeting on Dec 4, where it rolled over a policy of pumping crude without restraint.

On the New York Mercantile Exchange, WTI crude for January delivery fell 0.72% to $36.50 a barrel. They reached a peak of $108 per barrel in June 2014.

Brent futures are down more than 6 per cent this week and having dipped below US$40 per barrel there are renewed expectations it might test 2008’s low around US$36.