United States output growth has began to shrink and low oil prices have spurred demand but still not enough to help clear the glut.
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Brent futures were 24 cents lower $39.87 per barrel at 1340 GMT, having traded as high as $40.70.
West Texas Intermediate for January delivery was at $36.15 a barrel.
Brent crude futures for January, the global benchmark, fell US$1.80 (4.5 per cent) to US$37.93 a barrel in London, a level last seen amid the 2008 global financial crisis.
Oil prices continued to sink Thursday as Opec reported its November output reached a three-and-a-half-year high, with the cartel seeking to drive out of the market higher cost producers.
USA gasoline jumped more than 3 percent after reports that BP’s 405,000-bpd Whiting catalytic reformer unit was shut on Wednesday at just before midnight NY time. Prices fell due to pessimist sentiment stemming from oversupply.
Iraq’s output in 2015 has jumped by nearly 500,000 barrels making it-along with the U.S.-one of the world’s two fastest sources of supply growth and a key driver of surging OPEC production, according to the International Energy Agency.
Global oil supply, too, was unrelenting, hitting almost 96 million barrels per day.
Strong output from the U.S. and OPEC are key contributors to the global crude oversupply.
Oil giant Tullow is predicting tough times ahead for the oil industry in the coming months as prices of the commodity on the world market continue to decline.
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.
“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. As companies make further spending cuts in reaction to sub-$50/bbl oil, the impact on supplies – both from non-OPEC and OPEC – will be even more pronounced in the longer term.
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November’s 31.695 million barrel per day total exceeds the anticipated 2016 demand for OPEC crude.
