Oil dives again as IEA sees larger glut

Oil dives again as IEA sees larger glut

Oil sold off sharply again Friday after the International Energy Agency said it sees the global oil glut worsening through late 2016. ... 5:30 PM

Oil sold off sharply again Friday after the International Energy Agency said it sees the global oil glut worsening through late 2016.


US benchmark West Texas Intermediate (WTI) for delivery in January dropped $1.14, or 3.1 percent, to $35.62, the lowest level since February 2009.

Brent crude futures for January, the global benchmark, fell $1.80 (4.5 percent) to $37.93 a barrel in London, a level last seen amid the 2008 global financial crisis.

WTI has shed nearly 11 percent in the past week and Brent almost 12 percent.

“The market continues to search for a bottom,” said Gene McGillian of Tradition Energy.

“Last week’s decision by OPEC not to change policy and to keep pumping as much oil as they could in a dismal fundamental picture continues to drive prices lower.”

In its monthly report, the IEA warned Friday that global inventories “are set to keep building at least until late 2016.”

The agency said slightly higher OPEC crude output accounted for most of the increase in global oil supply in November, while non-OPEC supply was unchanged and annual demand growth slowed.

The Organization of the Petroleum Exporting Countries, which produces about 40 percent of global oil supplies, is seeking to drive out higher-cost producers from the market.

“There is evidence the Saudi-led strategy is beginning to work,” said the IEA, adding that it expects non-OPEC supplies to drop by 600,000 barrels per day next year owing to a drop in oil production from North American shale rock.

“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.