Brent crude oil slipped below $66 a barrel on Wednesday, just above a five-year low, as producers forecast lower demand for their oil next year.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation.
The price of the North Sea oil benchmark has fallen more than 40 percent since June as new supplies of high-quality crude from North America have fed a glut in many parts of the world.
“There is a growing realisation that the first half of next year is going to look very weak,” said Gareth Lewis-Davies, strategist at BNP Paribas. “You start to price that in now.”
Brent futures for January fell to a low of $65.54 a barrel, down $1.30, before recovering slightly to trade around $65.90 by 1215 GMT. The contract hit $65.29 on Tuesday, its lowest since September 2009.
U.S. crude futures were down $1.12 at $62.70 a barrel.
Data from the American Petroleum Institute (API) on Tuesday showed U.S. crude oil inventories rose by 4.4 million barrels last week to 377.4 million barrels, compared with analysts’ expectations of a drop of 2.2 million.
U.S. gasoline and distillate stocks also showed big builds, the API said.
“Almost all the news flow points to a weaker market,” said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
“We have had very bearish API data with large stock builds across the board, and also a very bearish Short-Term Energy Outlook from the EIA, with a sharp reduction in demand growth forecasts for next year.”
The U.S. Energy Information Administration cut its global oil demand growth estimate for 2015 by 240,000 barrels per day (bpd) to 880,000 bpd. It forecast oil demand growth this year would be around 960,000 bpd.
OPEC members are divided on how to respond to the global surplus and falling prices. The cartel may still hold an emergency meeting before its June gathering, Algeria’s energy minister said on Tuesday.
Italian oil and energy group Eni said OPEC may cut output in the spring and that oil prices will remain between $66 and $75 per barrel next year.
Top oil producer Saudi Arabia blocked production cuts at OPEC’s meeting in November and has taken steps to shore up its market share.