“Lower oil prices dampen Saudi Arabia’s potential economic spend and, in turn, the country’s own oil use, a downturn that is eased as additional petrochemical demand from the Sadara facility in Jubail provides an offset”, said the IEA.
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“Comments from the IEA have… seen both WTI and Brent fall aggressively, after they indicated that the unrelenting supply would see oil prices lower into the new year”, said analyst James Hughes at trading firm GKFX.
The price of Brent crude oil fell below $39 a barrel at one point, its lowest since December 2008.
ANZ bank said on Friday that “crude oil markets will remain subdued in 2016, though prospects for a recovery look better in the second half of the year”.
Global oil prices tanked on Friday close to seven-year lows on oversupply woes, sparking a fresh wave of selling on European and U.S. stock markets as panicked investors fled the energy sector.
Despite a year of depressed prices, global oil output in November had grown to 1.8-million barrels per day above levels since in November 2014, when the Organization of Petroleum Exporting Countries (OPEC) rattled markets by refusing to cut production to cope with an over-supplied market.
Overnight in New York, West Texas Intermediate crude oil futures fell to a new low seven-year low of about $36.13 per barrel.
OPEC’s output was 31.695 million b/d in November, up 230,100 b/d from 31.465 million b/d the previous month, according to the latest OPEC report. That is 900,000 barrels a day more than in May 2015 and more than 2 million barrels a day more than at the end of the third quarter past year.
The IEA predicts that will slip back to 1.2 million barrels a day next year. USA crude settled down 3.10 percent at $35.62 after hitting $35.32, its lowest since February 2009.
While Novak did not take part in that OPEC meeting in Vienna, Russia is expected to take part in the next expert-level meeting between OPEC and some non-OPEC producers on global oil markets on Tuesday.
The IEA, which advises developed nations on energy, also said in its monthly report that demand growth was starting to slow.
The rout is a result of a huge overhang in production that is fast filling onshore storage sites, which some analysts expect to run out in early 2016.
US Treasury debt prices surged on safe-haven demand.
“OPEC’s decision to scrap its official production ceiling and keep the taps open is a de facto acknowledgment of current oil market reality”, the IEA said in the report.
During the financial crisis in December 2008, Nymex crude bottomed at just under $US34 a barrel.
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USA 30-year yields were last down 6/32 in price to yield 2.97 per cent, from a yield of 2.96 per cent late Wednesday.
