Oil prices fell for a seventh straight session on Monday, coming close to 11-year lows, amid growing fears that the global oil glut would worsen in the months to come.
Brent crude fell by 3.4 per cent to below $36.70 a barrel for the first time since December 2008 and U.S. West Texas Intermediate (WTI) sank 2.5 per cent below $34.70 a barrel.
Brent traded less than 50 cents above the lows last seen during the 2008 financial crisis of $36.20 a barrel.
“Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues,” said Amrita Sen from Energy Aspects think tank.
Both benchmarks have fallen every day since the Organization of the Petroleum Exporting Countries, OPEC, abandoned its output ceiling on December 4.
In the past six sessions, they have shed more than 13 per cent each.
OPEC has been pumping near record levels since last year in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.
New supply is likely to hit the market early next year as OPEC member Iran ramps up production once sanctions are lifted as expected following the July agreement on its disputed nuclear programme.
“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,” it said.
Gulf producers and Russia have said they would not cut output even if prices fell to $20 per barrel.
On Friday, the International Energy Agency, IEA, said the global supply glut was likely to deepen next year and put more pressure on prices.
OPEC supply is likely to increase by 1 million bpd next year, Morgan Stanley analysts said in a research note on Monday.
“Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi,” it said.