The U.S. benchmark also fell to as low as $34.53 a barrel.
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If Brent is to fall below that price, it would be the lowest price its seen since the middle of 2004 a year when crude was starting to surge from the single digits it touched during the financial crisis of 1998 and when there was talk that the commodity super cycle was just starting.
Crude has slumped dramatically since the OPEC oil producers’ group on December 4 opted against cutting its output levels, and there are warnings of further pain ahead as the global economy struggles.
Iran’s crude oil exports are set to hit a six-month high in December as buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year.
Evans-Pritchard also said that (emphasis my own): “Everything points to low oil prices next year, and it’s possible that it could be $US30 a barrel, and maybe less”.
Traders betting on a jump in USA crude prices above those in the rest of the world if Congress lifts America’s oil-export ban may be disappointed.
“All new production will be earmarked for exports”, BMI Research said. Prior to OPEC’s meeting, Iran’s oil minister Bijan Zangeneh was reported to have said that negotiations with Iran not to increase its output were out of the question.
Nevertheless, it is business as usual in Iran where production costs in some central oil fields wallow at $1-$1.5 a barrel. Oil markets usually see strong demand towards year end as the northern hemisphere enters its peak winter heating demand season. It said the Organization of the Petroleum Exporting Countries’ continued high-paced production and the possibility of more oil from Iran will cause global inventories to swell by 300 million barrels.
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’.
But in its most recent monthly report, it admitted that its “oil demand forecast for 2016 is subject to considerable uncertainties, depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.
As a result of low oil prices in oil producing countries and the worldwide companies having no option but to shut down their expensive oil fields, the flow of oil into the global markets will slow down and lead to taking out some surplus crude oil – around three million barrels.
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Oil prices fell for the seventh straight session on Monday, amid lingering concerns a global supply glut may stick around for longer than anticipated. “The oversupply is about 1.5 percent of a 95 million bpd market with limited spare capacity in a risky political setting for weak petro states prone to disruption”, Citibank said.
