Investing.com - Brent oil tanked to the lowest level since July 2004 on Monday, as persistent worries over a global supply glut drove down prices.
Trading volumes are expected to remain light in the week ahead due to the Christmas holiday and as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility.
On the ICE Futures Exchange in London, Brent oil for February delivery dropped 21 cents, or 0.83%, to trade at $36.57 a barrel during U.S. morning hours. It earlier fell to $36.05, a level not seen in more than 11 years.
London-traded Brent futures slumped 97 cents, or 2.77%, last week, the third consecutive weekly decline. Brent prices are on track to post an annual decline of 36% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Elsewhere, crude oil for delivery in February on the New York Mercantile Exchange shed 15 cents, or 0.42%, to trade at $35.91 a barrel.
Nymex futures sank to $34.29 on Friday, the lowest since February 2009, data showed that rigs drilling for oil in the U.S. rose last week, underlining concerns over robust domestic production.
Industry research group Baker Hughes (N:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by 17 to 541 last week, the first gain in five weeks.
New York-traded oil futures declined 89 cents, or 2.49%, last week, the third straight weekly loss. U.S. oil futures are down nearly 35% so far this year amid worries over ample domestic supplies.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at 66 cents, compared to 82 cents by close of trade on Friday.
The price gap between the two benchmarks narrowed to the smallest level in years, following Congress' decision last week to lift a 40-year old ban on domestic oil exports, signaling that the U.S. oil market is likely to grow tighter, while a global glut gets worse in 2016.
Oversupply issue will be exacerbated once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.