Oil slips below $35 on worsening supply glut

The crude oil prices continued to skid further on worsening situation of oversupply. The surging US dollar is also further hammering down on the oil price, which closed to its lowest since February 2009. The crude oil prices are reeling under pressure in Asia, Europe and New York markets as well.

The US Federal Reserve's decision to hike interest rate is also impacting oil price. The surge of US dollar makes oil more expensive for emerging economies with weaker currencies. The crude oil prices were trading below $35 per barrel in Asian trading.

West Texas Intermediate (WTI) for January delivery was weaker at $34.77 a barrel, 18 cents lower than the closing of $34.95 in New York. European benchmark Brent crude for February also eased nine cents to $36.97 a barrel. Energy analysts forecast oil price could drop to $32 a barrel in the near future.

According a report by Fine24, the oil trading is seen at the levels witnessed during the global financial crisis of 2008. The Organization of Oil Exporting Countries (Opec) continues to maintain its production level. Opec doesn't seem to be bothered about the drastic fall in oil prices.

The demand for oil is also weak amid global economic slowdown. Though some predict oil price to be more balanced in 2017, majority of analysts forecast the oil price is more likely to test mid-$30 a barrel level. However, some predict that oil price may rebound to some extent during the second half of 2016.

Opec is bearish on oil prices for 2016 as oversupply situation to remain in place, says Reuters report. The additional output from Iran will also add to the present oversupply situation in the global market. Oil price during the past 18 months more than halved owing to supply glut.

Opec denies to cut production level in a metting held on 4 December 2015. On the other hand, non-Opec members are also increased supply levels. Oil futures on New York suffered losses as they slipped to seven-year lows.

Oil prices recorded 2.2 percent losses during the week. Crude supplies rose to 490.7 million barrels indicating highest level since 1930, according to Energy Information Administration (EDA). White House had decided to lift 40-year old restrictions on crude exports.

According to a report by Bloomberg, the prices may further move down after the US Federal Reserve hiked interest rate, which reduced investment appeal in commodities. Goldman Sachs Group has also cautioned that high risks that oil prices to fall in the wake of increasing supplies.

The surging US dollar is further weakening the oil price, which is trading below $35 in the early trading on Friday. With the Brent's January 2016 contract expiring, spread traders prefer to close their positions in this contract.

Energy analysts feel that either there should be demand pickup from the global economy revival or production cut to push oil price moving upwards. The market is more likely to remain at the current level and could move to such low levels witnessed during the Great Recession.