SINGAPORE: Oil tumbled to fresh multi-year lows in Asia on Friday after OPEC said output had surged, exacerbating concerns over a supply glut that is expected to persist beyond next year.
The Organization of the Petroleum Exporting Countries reported its collective production rose by 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 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 22 cents at $36.54 and Brent crude for January was trading 25 cents lower at $39.48 at around 6:20 a.m. local time, 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 US 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.