US crude oil holds near 2009 lows as global glut persists

Crude prices have lost more than 13% since the beginning of the month

US crude prices remained near 2009 lows in early Asian trading on Friday as oil output in the Middle East continued to rise despite an existing global glut.

US crude futures were at $36.67 per barrel at 0029 GMT, down 9 cents from their last settlement, and only slightly above 2009 lows of $36.38 reached on Thursday. Prices have lost more than 13% since the beginning of the month.

The rout is a result of a huge overhang in production, which is seeing anywhere between half a million and 2 million barrels of crude oil being produced every day in excess of demand, and is fast filling onshore storage sites, which some analysts expect to run out in early 2016.

 

Iraq's soaring output has been a large contributor to the glut, with production doubling over the past decade to around 4.3 million barrels per day, more than enough to meet all of India's demand.

"Concerns over further supply growth intensified after OPEC data showed that production from the member group rose 230,000 barrels per day to 31.7 million barrels per day, the highest level since April 2012," ANZ bank said.

"This is likely to keep pressure on oil prices in the short-term," it added.

The other main driving factor for the oversupply has been soaring US shale production, and this is also affecting the natural gas market.

US spot natural gas prices have fallen below $2 per million British thermal units for the first time on record this week and prices are down 46% this year, down by half since mid-2014 when the oil rout began, and 84% lower than their 2008 peak.