Oil sold off sharply again on Friday after the International Energy Agency (IEA) said it sees the global oil glut worsening through late next year.
US benchmark West Texas Intermediate (WTI) for delivery in January dropped US$1.14, or 3.1 percent, to US$35.62, the lowest level since February 2009.
Brent crude futures for January, the global benchmark, fell US$1.80 (4.5 percent) to US$37.93 a barrel in London, a level last seen during the 2008 global financial crisis.
WTI shed nearly 11 percent in the past week and Brent almost 12 percent.
“The market continues to search for a bottom,” Gene McGillian of Tradition Energy said.
“Last week’s decision by OPEC not to change policy and to keep pumping as much oil as they could in a dismal fundamental picture continues to drive prices lower,” he said.
In its monthly report, the IEA on Friday warned that global inventories “are set to keep building at least until late 2016.”
The agency said slightly higher OPEC crude output accounted for most of the increase in global oil supply last month, while non-OPEC supply was unchanged and annual demand growth slowed.
OPEC, which produces about 40 percent of global oil supplies, is seeking to drive out higher-cost producers from the market.
“There is evidence the Saudi-led strategy is beginning to work,” the IEA said, adding that it expects non-OPEC supplies to drop by 600,000 barrels per day next year owing to a drop in oil production from North American shale rock.
“Comments from the IEA have ... seen both WTI and Brent fall aggressively, after they indicated that the unrelenting supply would see oil prices lower into the new year,” analyst James Hughes at trading company GKFX said.
Meanwhile, gold options are signaling there is more disappointment ahead for bulls.
Traders backed away from bets on a rally on Thursday, making the top four most-active options that day calls that fell at least 17 percent.
While futures rose on Friday, prices still posted a weekly loss as investors awaited a two-day US Federal Reserve policy meeting that starts on Tuesday. Silver futures fell to a six-year low.
Gold has slumped more than 9 percent this year amid increasing signs that Fed officials will raise interest rates for the first time since 2006, cutting the metal’s appeal as a store of value.
The bullion option with the highest open- interest, or the most-held by traders, gives owners the right to sell futures at US$1,000 an ounce by February. Prices have not traded at that level since 2009.
“The majority of investors still feel there will be an interest-rate rise next week, and that has long been a detriment to gold, because it strengthens the US dollar, which is what gold is priced in,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview.
“We did notice calls the last day or two giving signals that people are giving up on the gold rally,” he said.
Gold futures for February delivery climbed 0.3 percent to settle at US$1,075.70 an ounce at 1:55pm on the Comex in New York. Prices declined 0.8 percent this week.
Still, some bullion watchers see hope for bulls next year. Gold will probably climb next year with wheat and natural gas, a Bloomberg survey of 108 traders, analysts, economists and strategists across Asia, Europe and the Americas shows.
Assets in gold-backed exchange-traded products expanded for a third day to 1,465.46 tonnes as of Thursday, according to data compiled by Bloomberg. Holdings contracted on Monday to the lowest level in more than six years.
Silver futures for March delivery slid 1.6 percent to US$13.884 an ounce on the Comex, after dropping to US$13.75, the lowest since August 2009.
On the New York Mercantile Exchange, platinum fell, while palladium increased.
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