Investing.com - Oil prices crashed to fresh seven-year lows on Friday, after a bearish report from the International Energy Agency projected that a global supply glut could worsen next year.
In its December oil market report released Friday, the Paris-based IEA projected global demand growth in 2016 to slow considerably, widening the gulf in the supply-demand imbalance worldwide. Next year, the IEA anticipates that global demand will grow by 1.2 million barrels per day, down from a previous estimate of 1.8 million.
“As inventories continue to swell into 2016, there will still be a lot of oil weighing on the market,” the IEA said.
The bearish estimates came one day after the Organization of the Petroleum Exporting Countries said it pumped the most crude in more than three years last month, adding to concerns over a glut in global supplies.
In its own monthly oil market report published Thursday, OPEC said crude production rose by 230,100 barrels a day in November to 31.695 million, the most since April 2012, as the cartel pressed on with a strategy to protect market share and pressure competing producers.
Oil futures are down approximately 14% since OPEC failed to agree on output targets earlier this month. As a result, crude prices are expected to remain stubbornly low amid a glut of oversupply on global energy markets.
On the ICE Futures Exchange in London, Brent oil for January delivery sank $1.80, or 4.53%, on Friday to close the week at $37.93 a barrel. It earlier fell to $37.36, a level not seen since the depths of the global financial crisis in December 2008.
On the week, London-traded Brent futures dropped $5.07, or 11.79%, its worst weekly loss of the year. Brent oil prices are on track to post an annual decline of 33% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in January tumbled $1.14, or 3.1%, to close the week at $35.62 a barrel. It earlier touched $35.16, the lowest since February 2009.
For the week, New York-traded oil futures plunged $4.35, or 10.88%, the biggest weekly decline since December 2014. U.S. oil futures are down 33% so far this year amid worries over ample domestic supplies.
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.