Oil tumbled to fresh multi-year lows in Asia today after the OPEC cartel said output had surged, exacerbating concerns over a supply glut that is expected to persist beyond next year.
The Organization of Petroleum Exporting Countries reported its collective production rose 230,100 barrels a day in November to 31.7 million, the highest in three-and-a-half years and beyond its 30 million ceiling target.
The group is battling for market share with other oil producers, including the United States, and had last Friday decided against cutting output despite plunging prices, weak global demand and the supply glut.
US benchmark West Texas Intermediate (WTI) for delivery in January was down 28 cents at $36.48 and Brent crude for January delivery was trading 26 cents lower at $39.47 at around 0240 GMT, their lowest levels since early 2009 during a global financial crisis.
“Crude oil prices saw a renewed decline as OPEC output rose to a three-year high in November, reinforcing consternation that the global oil market is going to remain oversupplied for a longer time,” said Bernard Aw, market strategist at IG Markets in Singapore.
“Focus now turns to the Baker Hughes drill rig count this evening,” he said, referring to an inventory of active oil drilling rigs in the United States indicating production activity.
Strong output from the US and OPEC are key contributors to the global crude oversupply. Iranian oil will return to the markets by next year after western sanctions are lifted under a landmark deal reached in July to curb Tehran’s nuclear programme.
“The oil sector is expected to stay under pressure in the near term... as output from global oil producers is likely to rise further in the future,” Aw added.
WTI has lost around a tenth of its value since today and more than 60 per cent since hitting recent peaks above $100 in summer 2014.