Coming close to 11-year lows due to fears that the global oil glut would worsen in the months to come in a pricing war between leading OPEC and non-OPEC producers, oil prices fell for a seventh straight session on Monday.
For the first time since December 2008, Brent crude fell by 3.4 percent to below $36.70 a barrel while there was a 2.5 percent drop in prices for U.S. West Texas Intermediate to reach below $34.70 a barrel.
The last time Brent was so low was during the 2008 financial crisis when it traded at $36.20 a barrel. It traded barely less than 50 cents above that low. If the Brent falls below the $36.20 a barrel it would be the lowest since mid-2004, when talk of a commodity super-cycle was only beginning.
WTI's financial crisis low was $32.40 in December 2008.
"Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues," said Amrita Sen from Energy Aspects think tank.
Since the Organization of the Petroleum Exporting Countries on Dec. 4 abandoned its output ceiling, there has been a steady fall everyday in both the benchmarks. They have shed more than 13 percent each in the past six sessions.
In an attempt to drive higher-cost producers such as U.S. shale firms out of the market, OPEC has been pumping near record levels since last year.
As OPEC member Iran ramps up production once sanctions are lifted new supply of crude and natural gas is likely to hit the market early next year. International sanctions against Iran were lifted in July this year on its disputed nuclear program.
"All new production will be earmarked for exports," BMI Research said in a note. "In addition to volumes released from storage, Iran will be able to increase crude oil and condensates exports by a maximum of 700,000 b/d by end-2016," the note said.
As buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year, Iran's crude oil exports are set to hit a six-month high in December says sources in the industry who are aware and knowledgeable about the tanker loading schedules.
Manager Director of Iran's Central Oil Fields Company, Salbali Karimi was quoted by Iranian news agency Shana as saying Iran's cost of production stood $1-$1.5 per barrel. This indicates that Iran has the capability to ramp up productions regardless of the global crude prices which is anticipated to raise supply in the global market.
Even if prices fell to $20 per barrel, there would be no cut in production – the Gulf producers and Russia have previously stated.
There is likely to be more pressure on prices due to a deepening of the global supply glut, said the International Energy Agency on Friday. However it also added that there would be enough storage space for the produce.
Morgan Stanley analysts said in a research note Monday that the OPEC supply is likely to increase by 1 million bpd next year.
"Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi," it said.
(Source:www.reuters.com)
For the first time since December 2008, Brent crude fell by 3.4 percent to below $36.70 a barrel while there was a 2.5 percent drop in prices for U.S. West Texas Intermediate to reach below $34.70 a barrel.
The last time Brent was so low was during the 2008 financial crisis when it traded at $36.20 a barrel. It traded barely less than 50 cents above that low. If the Brent falls below the $36.20 a barrel it would be the lowest since mid-2004, when talk of a commodity super-cycle was only beginning.
WTI's financial crisis low was $32.40 in December 2008.
"Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues," said Amrita Sen from Energy Aspects think tank.
Since the Organization of the Petroleum Exporting Countries on Dec. 4 abandoned its output ceiling, there has been a steady fall everyday in both the benchmarks. They have shed more than 13 percent each in the past six sessions.
In an attempt to drive higher-cost producers such as U.S. shale firms out of the market, OPEC has been pumping near record levels since last year.
As OPEC member Iran ramps up production once sanctions are lifted new supply of crude and natural gas is likely to hit the market early next year. International sanctions against Iran were lifted in July this year on its disputed nuclear program.
"All new production will be earmarked for exports," BMI Research said in a note. "In addition to volumes released from storage, Iran will be able to increase crude oil and condensates exports by a maximum of 700,000 b/d by end-2016," the note said.
As buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year, Iran's crude oil exports are set to hit a six-month high in December says sources in the industry who are aware and knowledgeable about the tanker loading schedules.
Manager Director of Iran's Central Oil Fields Company, Salbali Karimi was quoted by Iranian news agency Shana as saying Iran's cost of production stood $1-$1.5 per barrel. This indicates that Iran has the capability to ramp up productions regardless of the global crude prices which is anticipated to raise supply in the global market.
Even if prices fell to $20 per barrel, there would be no cut in production – the Gulf producers and Russia have previously stated.
There is likely to be more pressure on prices due to a deepening of the global supply glut, said the International Energy Agency on Friday. However it also added that there would be enough storage space for the produce.
Morgan Stanley analysts said in a research note Monday that the OPEC supply is likely to increase by 1 million bpd next year.
"Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi," it said.
(Source:www.reuters.com)