Crude oil prices hit fresh seven-year lows on Friday as the International Energy Agency (IEA) warned global oversupply could worsen in 2016.
Brent slipped below 39 dollars per barrel for the first time since December 2008 as the IEA, which advises developed nations on energy, warned that demand growth was starting to slow.
“The technical and the fundamentals are singing from the same hymn sheet,” said Tamas Varga, oil analyst with PVM Associates.
“We will not see support until we hit the lows of 2008.”
Brent crude futures were down 60 cents at 39.13 dollars a barrel at 5.58 a.m ET, bouncing slightly from a session low of 38.90 dollars.
West Texas Intermediate (WTI) U.S. crude futures were at 36.26 dollars per barrel, down 50 cents after touching 36.12 dollars, their lowest since February 2009.
Varga said there was room to fall further with little support likely until oil reached the 2008 lows of 36.20 per barrel for Brent and 32.40 dollars per barrel for WTI.
Prices have tumbled this month after OPEC failed to impose a ceiling on output.
OPEC producers pumped more oil in November than in any month since late 2008, some 31.7 million barrels per day.
“Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2 million bpd in 2016, as support from sharply falling oil prices begins to fade,” the IEA said.
Should sanctions on Iran be lifted, its exports could rise, adding to the market’s oversupply.
“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter,” said Richard Gorry, director of consultancy JBC Energy Asia.
“Can you rule out $20 per barrel? No, you can’t,” he said, although adding that prices would not likely fall that far.
Still, the IEA said the pace of stock-building should roughly halve next year and that it was very unlikely that global storage capacity would be filled.
“Concerns about reaching storage capacity limits appear to be overblown,” it said.