Brent oil hits 11-year low as oil extends slide on glut worries

Brent oil hits 11-year low as oil extends slide on glut worries

SINGAPORE - Agence France-Presse
Brent oil hits 11-year low as oil extends slide on glut worries

A general view shows the French oil giant Total refinery of Donges, western France, October 26, 2015. Picture taken October 26, 2015. REUTERS/Stephane Mahe

European benchmark Brent crude slid to an 11-year low on Dec. 21 as oil prices resumed their slide in an oversupplied global market facing the prospect of renewed US exports.

In the morning, Brent crude for February delivery was down 59 cents at $36.29.

U.S. pricing standard West Texas Intermediate (WTI) for January delivery was 36 cents lower at $34.37.

U.S. lawmakers last week lifted a 40-year ban on oil exports, a historic shift, even though analysts say the world supply glut is still the main driver of prices in the short term.

Daniel Ang, an investment analyst at Phillip Futures in Singapore, said Brent could be testing its 11-year low because the United States lifted its export ban, which has been in place since the oil crisis of the mid-1970s.

“This gives Brent more weakness than WTI, as seen from the narrowing WTI-Brent spread.”   

“However, at the end of the day, I would think that prices would face strong support as they move lower, and I would think that we would not see prices below $30,” Ang added.

Bloomberg News said Brent slid by as much as 71 cents to $36.17 a barrel on the London-based ICE Futures Europe exchange, the lowest level in intraday trade since July 13, 2004.

Overall, crude has sunk more than 60 percent from above $100 in summer 2014.

Prices have particularly slumped since December 4 when the OPEC oil producers’ group decided against limiting production, despite tepid demand and the supply glut.

Oversupply woes were also stoked on Friday by the Baker Hughes US oil rig count, which showed an increase of 17 for the week ending December 18 to 541 rigs.

This added to “the already prevailing negative sentiments in the market due to the build-up in inventory,” said Sanjeev Gupta, head of the Asia-Pacific Oil and gas practice at professional services organization EY.

Gupta said the lifting of the U.S. export bans would have no immediate effect on spot prices but could be “negatively impacting long-term futures prices”.