AP FILE PHOTO
NEW YORK—The oil market further weakened Wednesday, closing a year that packed the steepest fall in prices since the 2008 financial crisis as a global supply glut lockstepped with slowing economies.
US benchmark West Texas Intermediate (WTI) for February delivery fell 85 cents to finish at $53.27 a barrel on the New York Mercantile Exchange, its lowest close since May 1, 2009.
The international benchmark, Brent North Sea crude for February delivery, settled 57 cents lower at $57.33 in London.
WTI lost 46 percent of its value this year and Brent was down 48 percent, with most of the freefall happening since June, when prices were above $100.
Rising US and Canadian oil production has contributed to ample global supplies at a time of slowing growth in China, the world’s largest energy consumer, and other emerging-market economies, a recession in Japan and a near-stall in the 18-nation eurozone.
A decision last month by OPEC, which supplies about a third of the world’s oil, to leave output unchanged despite the price plunge also rattled the market, adding further pressure on prices.
And the dollar’s long-running rally, making greenback-priced oil more expensive for buyers using weaker currencies, has played a role in undermining the market, analysts said.
Economic news released in the United States and China echoed the year’s themes of oversupply and economic slowdowns.
Though US crude oil stockpiles fell last week by 1.8 million barrels, that was a negligible drop compared with the prior week’s surge.
Supplies in the world’s largest crude consumer remained well above average for this time of year, and were up 6.9 percent from a year ago.
US crude production, at more than nine million barrels per day, is at the highest level in more than 30 years.
The final reading of HSBC’s purchasing managers index for the manufacturing sector in China fell to a seven-month low in December of 49.6, showing a contraction in activity. A reading above 50 indicates growth.
James Williams, an energy expert at WTRG Economics, predicted that oil prices could continue to fall throughout the first quarter next year.
“Early spring is the lowest for oil demand seasonally, so prices could continue to fall maybe another $10, but from that point I expect prices to rise, particularly in the second half, depending on the world economy,” he said.
Daniel Ang, investment analyst at Phillip Futures in Singapore, also pointed to expectations for a price rebound in 2015.
He said the global supply glut could likely be alleviated by current low oil prices affecting “existing shale oil rigs, causing them to shut off, keeping US crude oil production in check.”
“In 2015, we believe that crude demand would be linked to how China, Japan and the eurozone perform. If we start to see the situation for these countries improve, a reversal from the demand side could happen,” Ang added.