NEW YORK, Dec 11 (Reuters) – Oil prices extended their freefall on Friday, flirting with 11-year lows, after the International Energy Agency (IEA) warned that global oversupply of crude could worsen next year.
Brent and U.S. crude’s West Texas Intermediate (WTI) futures fell as much as 5 percent on the day and 12 percent on the week as mild pre-winter weather and a plummeting U.S. stock market added to the toll on oil prices.
Oil traders and analysts alike have been perplexed by oil’s decline since the Dec. 4 meeting of the Organization of the Petroleum Exporting Countries which all but abandoned price support for crude by removing OPEC’s production ceiling in an oversupplied market.
“It’s very tough to find a cause to get bullish here,” said Peter Donovan, broker at Liquidity Energy in New York.
“The bearish IEA report has put further selling pressure on an already soft market. The back months have actually been hit a bit harder than the fronts as the report dispelled thoughts that a price recovery was on the not-too-distant horizon.”
Brent’s front month slipped below $38 a barrel for the first time since December 2008, settling down $1.80, or 4.5 percent, at $37.93.
2004 Low Beckons
Brent’s session low was $37.36 – barely a dollar above the $36.20 hit during the financial crisis. If Brent falls below that level in the coming week, that will be its lowest since mid-2004, when it traded at around $34 a barrel.
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