Oil Heads for Third Straight Weekly Loss
Brent set for third yearly loss for first time; WTI-Brent spread recovers from 11-month low.
Oil fell on Friday as bearish sentiment driven by oversupply rattled the market and was set to lead prices to a third straight weekly drop, the longest losing streak in four months.
Global benchmark Brent crude traded down 24 cents at $36.82 a barrel at 1133 GMT. U.S. crude futures fell to a near seven-year low of $34.41 a barrel but later recovered to $34.51, down 44 cents on Thursday's close.
The global supply glut that brought prices close to 11-year lows this week means Brent will post losses for a third consecutive year, the first time that has happened since exchange-based oil trading started in the 1980s.
West Texas Intermediate (WTI) futures are set for a second straight yearly loss, the first time that will have happened for the U.S. oil pricing benchmark since 1998.
"Prices are falling on continued bearish sentiment and maybe WTI has fallen on the conviction that it was priced too high against Brent," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
The WTI-Brent spread fell to the lowest in 11 months earlier this week at $1.10 a barrel. The differential has since recovered to $2.29 as WTI made bigger losses.
Traders were preparing for even lower crude prices next year by taking up more put options to sell U.S. crude in February should prices fall to $30, $25 or even $20 per barrel, according to Reuters data.
Russia, one of the world's top oil producers, said on Friday it was not considering coordinating its output policy with OPEC members, adding the organisation was not exerting as much influence as it did in the 1970s and 1980s.
Russia has long maintained informal contacts with OPEC and hinted in the past it might be ready to cut oil production to prop up prices.
The seemingly unstoppable decline in oil is raising concerns about investment in future supplies, IEA Executive Director Fatih Birol said on Friday in Singapore.
"The current low oil price makes me worried because it means lower investments in new oil projects," he said.
"This year, oil investments declined more than 20 percent and more importantly we expect it will decline next year as well," Birol said. "We have never seen in the last 30 years oil investments decline two years in a row in the world."
By Karolin Schaps
