Brent, the global standard, fell $1.11 to $38.62 a barrel on the ICE Futures Europe.
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The IEA said there’s mounting evidence that OPEC’s strategy is working as crude production outside of the group’s 13 exporters has fallen and is projected to fall by 600,000 barrels a day next year.
On Thursday morning in New York, WTI fell 1% to as low as $36.55 per barrel.
Oil prices hit their lowest levels since the height of the Great Recession on Friday following a pessimistic outlook from the International Energy Agency.
In 2016, demand for OPEC crude is forecast at 30.8 mb/d, an increase of 1.5 mb/d over the current year and unchanged from the previous assessment.
Output from the Organization of Petroleum Exporting Countries rose by 230,100 barrels a day in November to 31.695 million a day, the highest since April 2012, as surging Iraqi volumes more than offset a slight pullback in Saudi Arabia.
Oil has lost 39 percent in the past year as OPEC maintains output to defend market share against higher-cost producers amid a global glut.
Goldman Sachs and others have suggested that oil prices could plunge to as low as 20 dollars a barrel as capacity to store unwanted oil might run out.
“Lower prices are clearly taking a toll on non-OPEC supply with annual growth shrinking below 0.3 million barrels a day in November from 2.2 million barrels a day at the start of the year”, the IEA said.
Earlier this week, the US Energy Information Administration forecast that US shale oil production, now a major source of oil supply, would fall in January for the ninth month in a row.
With extra barrels coming from OPEC and no sizeable increase in demand for OPEC crude, the report points to a 860,000-bpd supply surplus next year if the group keeps pumping at November’s rate, up from 560,000 bpd indicated in last month’s report.
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“There was somewhat more positive data, but OPEC is not going to support the market and I think there’s a high probability that we will break through the lows of 2008”, said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo.
