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Oil extends slide on US production, export worries

Oil prices

Singapore : Oil prices resumed their slide in Asia today as a spurt in the number of US oil rigs in use and the prospect of renewed crude exports from the country compounded a global oversupply.

At 0335 GMT, US benchmark West Texas Intermediate for January delivery was down 20 cents at USD 34.53, sitting at lows not seen since the height of the global financial crisis at the start of 2009.

European benchmark Brent crude for February was down 33 cents at USD 36.55.

Prices have slumped by almost a fifth since December 4 when the OPEC oil producers’ group decided against limiting its production, despite tepid demand and the supply glut.

The commodity has sunk more than 60 per cent from above $100 in summer 2014 and are now at levels not seen since the financial crisis.

Oversupply woes were also stoked on Friday by the  Baker Hughes US oil rig count which showed an increase of 17 for the week ending December 18 to 541 rigs.

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 organization EY.

US lawmakers last week lifted a 40-year ban on oil exports, marking a historic shift even though it is still largely symbolic in the futures market.

Gupta said while the move would likely have limited impact on spot prices, he warned it could “negatively impacting long-term futures prices”.

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