Oil hits five-year low amid glut and faltering demand

Brent crude oil traded below $60 a barrel yesterday, near five-and-a-half-year lows, as major oil producers signalled that they would maintain output despite a supply glut and faltering demand in Russia and Europe.

Core Gulf OPEC members have said they are prepared to wait as long as a year for the market to stabilise, undercutting hopes they will step in to stem crude price losses.

Oil prices have almost halved over the last six months as increasing volumes of light, high-quality crude from North American shale have overwhelmed demand.

“Every day now you have some Gulf OPEC member actively trying to talk the market down,” said Olivier Jakob, oil analyst at Petromatrix. “OPEC is trying to choke US oil producers.”

Yesterday, Iraqi Kurdistan government officials said Iraqi crude oil exports to the Turkish port of Ceyhan could reach 800,000 bpd next year, higher than previously announced. Oil shipments from Angola, Africa’s second-largest exporter, are also set to increase in February to 1.86m barrels per day, the highest since 2012.

Russian energy minister Alexander Novak has said Moscow will not cut output in 2015, even if pressure on its finances rises with the economy showing signs of severe stress as the rouble collapses.

The crisis in Russia has sparked further concerns about energy demand growth. “The weak demand increases the amount of supply that must be removed from the market,” said Carsten Fritsch, an analyst with Commerzbank.

Analysts said stock data from the US Energy Information Administration due yesterday could also weigh on market sentiment.