Oil prices extended losses in Asia on Monday on fears that a global supply glut will last another year, with analysts saying the Paris climate deal likely will have no near-term effect on the commodity.
The OPEC cartel’s refusal to cut production as Iran prepares for the lifting of sanctions on its oil exports have brought the price of crude down to levels not seen since early 2009 during the global financial crisis.
Traders are also awaiting an expected interest rate hike by the US Federal Reserve this week, which could lift the dollar and reduce demand by making oil more expensive to customers using weaker currencies.
At 0750 GMT, US benchmark West Texas Intermediate was 18 cents down at $35.44 while Brent crude was 22 cents lower at $37.71.
Prices plunged more than 12 percent last week after the Organization of the Petroleum Exporting Countries, which produces about 40 percent of global oil supply, decided on December 4 not to reduce its output levels.
The crash was exacerbated when the International Energy Agency warned on Friday that it sees the global oil glut worsening through late 2016.
OPEC’s refusal to move in the face of slumping prices comes as it seeks to preserve its market share against higher-cost producers.
Iran has said it would not bow to pressure for it to avoid increasing its production following the lifting of sanctions imposed due to its disputed nuclear programme.
“Prices are likely to remain under pressure as the market will be closely watching the Federal Reserve’s policy-making this week,” said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services organization EY.
Traders will also be looking for economic data from Europe on October industrial production and manufacturing data from energy guzzler China due this week, he added.
Experts saw no immediate impact from the weekend Paris agreement to limit global warming to below two degrees Celsius (3.6 degrees Fahrenheit) over pre-industrial levels — by reducing countries’ reliance on fossil fuels.
However, SBI Securities Nobuyuki Fujimoto said: “Global warming is a problem, but it doesn’t mean we won’t use energy at all. Since it’s difficult to rely on nuclear power now and renewable energy is limited, we have to use thermal power.”