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Brent hits 11-year low as oil extends slide

Tuesday, December 22, 2015 - 06:55
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European benchmark Brent crude slumped to an 11-year low Monday as oil prices resumed their slide in an oversupplied global market.

[NEW YORK] European benchmark Brent crude slumped to an 11-year low Monday as oil prices resumed their slide in an oversupplied global market.

Brent North Sea crude for delivery in February finished down 51 cents at US$36.35 a barrel, its lowest closing price in 11 years.

US benchmark West Texas Intermediate for January delivery added a penny at US$34.74 a barrel on the New York Mercantile Exchange.

The new low for Brent "called fresh attention to the decline" in prices, said Tim Evans, energy analyst at Citi Futures.

"From a technical perspective, new lows extend the downtrend and may prompt the selection of even lower price targets." In terms of fundamental supply and demand, "the story may be less dramatic, with new lows really only confirming that oil is becoming cheaper," Mr Evans said.

Crude prices continued to slide as an ongoing supply glut showed no sign of easing.

Figures released Friday showed a rise in the number of US rigs drilling, increasing worries that output will continue apace.

This added to "the already prevailing negative sentiments in the market due to the build-up in inventory", said Sanjeev Gupta, head of the Asia-Pacific Oil and gas practice at professional services organisation EY.

Oil prices have fallen from more than US$100 a barrel in July 2014 due to high output from the US and key members of the Organisation of the Petroleum Exporting Countries, which has not cut output in response to the glut.

The downbeat sentiment has been further fueled by the expectation that oil output will surge in Iran in 2016 once sanctions are lifted.

AFP