Analysts forecast even further falls, as supply continues to outpace demand.
Crude struck fresh five-year lows in Asia on Tuesday, with analysts forecasting further falls owing to weak demand, a global supply glut and fewer production halts.
U.S. benchmark West Texas Intermediate for January delivery fell 52 cents to $62.53 while Brent for January eased 69 cents to $65.50 in afternoon trade. WTI tumbled $2.79 in New York to hit its lowest closing point since late July 2009, while Brent tanked $2.88 in London to its lowest close since September 2009.
“An extended period of lower oil prices should be positive for the global economy as a whole, including key emerging economies led by China and India,” said research house Capital Economics in a commentary. “However, we also see scope for renewed worries about the impact on the big losers, including geopolitically important economies like Russia, and on the oil industry itself,” it added.
The London-based firm said prices were likely to face “additional downward pressure” next year due to a projected reduction in global supply outages, the possible return of Iranian exports currently disrupted by sanctions, as well as a strengthening dollar. “Over the longer term, oil is also vulnerable to further falls in the oil-intensity of economic activity worldwide,” it said.
Prices have plunged from their 2014 peaks in June owing to slowing growth in China and emerging-market economies, a recession in Japan and a near-stall in the eurozone.
On top of that the OPEC oil cartel last month said it would maintain output levels despite ample global supplies. A stronger greenback has also weighed, making dollar-priced oil more expensive for buyers using weaker currencies, denting demand.