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 were perplexed by the intensity of the decline, coming exactly a week after the Dec. 4 meeting of the Organization of Petroleum Exporting Countries which all but abandoned price support for crude after removing its 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 crude futures slipped below $38 a barrel for the first time since December 2008, trading down $1.83, or nearly 5 percent, at $37.90 by 1:49 p.m. EST.
Brent’s session low was $37.36 – barely a dollar above the$36.20 hit during the financial crisis. If it falls below that, it will go to June 2004 lows, when it traded at around $34 a barrel.
WTI entered the $35 territory for the first time since February 2009. It was down…