Brent crude futures hit an 11-year low near $36 a barrel
21 Dec 2015
Crude oil prices hit an eleven-year low on Monday amidst a steady rise in global production and record supply boosting inventories in major consuming centres, including the United States.
Brent futures fell around 2 per cent to as low as $36.06 per barrel on Monday, a level last seen in July 2004 and below even the $36.20 mark reached during the peak of the global financial crisis of 2008.
US West Texas Intermediate (WTI) futures dropped 41 cents to $34.32 per barrel, holding near last week's lows.
In Asian markets, oil prices resumed their slide as a spurt in the number of US oil rigs in use and the prospect of renewed crude exports from the country compounded a global oversupply.
At 0335 GMT, US benchmark WTI for January delivery was down 20 cents at $34.53, sitting at lows not seen since the height of the global financial crisis at the start of 2009.
European benchmark Brent crude for February was down 33 cents at $36.55.
And, with new supplies expected to come from Iran and Iraq and the United States, analysts expect crude oil prices to fall further.
Global oil production is already at near record highs and, with new supply expected from Iran, Iraq and the US, markets are under pressure of an expected spurt in inventories.
Russian production surpassed 10 million bpd, the highest since the collapse of the Soviet Union, while Opec output remains near record levels above 31.5 million bpd.
OPEC leader Saudi Arabia raised production from 10.226 to 10.276 million bpd between September and October.
Iraq is reported to be sticking to its Opec target and has decided not to limit production despite the drop in prices.
And with falling oil prices, Iran is hoping to ramp up sales in early 2016 once sanctions against Tehran are lifted.
It may be noted that the spread between Brent and WTI futures has shrunk to the narrowest ahead of the US allowing domestic oil to be shipped overseas in an effort to ease the nation's oversupply.
US producers, including Continental Resources Inc and ConocoPhillips have been pressing for an end to restrictions on exports of unprocessed crude..
Many Asian refiners are now geared to process more crude, including heavier, cheaper crude with higher sulfur content.
