US Crude Oil Price Hits Another Low as Inventory Builds Up

The International Energy Agency, which advises industrialised countries on energy policy, said the global oil glut was set to last until at least late 2016 due to unseasonably warm weather and rising supply.

"With oil already hitting such a low, fundamentals are the key issue right now", said Phillip Futures analyst Daniel Ang, referring to supplies continuing to outrun demand.

Downward pressure on the global oil market has increased further after the International Energy Agency (IEA) warned on Tuesday that the oil market could "drown in oversupply".

The price of West Texas Intermediate, the USA crude benchmark, fell 3.1% to $27.58 as of 7:02 p.m. The price of Brent crude, the global benchmark, tumbled 2.5% to $28.05.

"Pending any major disruption in supply, the increase in exports from Iran will restrict any major gains to the price of crude in the near-term", he told AFP.

The market has been awash with supplies owing to high production levels by the United States and the OPEC cartel, which a year ago refused to slash output as it looks to maintain market share.

The IEA's assessment is that around 300,000 barrels per day of additional crude could be flowing to world markets by the end of the first quarter of 2016.

Despite over 25 per cent slump in oil price so far this year with the attendant pains and fears, oil drillers and producing nations have continued to pump more oil into an oversupplied market.

"There could possibly be some relief in the second half of the year as people inevitably look forward to 2017", IEA's Neil Atkinson, head of the oil industry and markets division, said.

While prices are expected to remain subdued, some analysts said they could be close to the bottom.

The IEA noted mild temperatures at the outset of winter in the U.S., Japan and Europe lowered demand for oil.

Oil producers worldwide are pumping one million to two million barrels of more crude every day than required, creating huge stockpiles.

Production from Opec, whose membership expanded last month with the return of Indonesia, slipped 90,000 barrels a day to 32.28 million a day in December amid slightly lower output from Saudi Arabia and Iraq, according to the report.