Sinking to record lows! Brent crude plunges to eleven year low

Brent futures fell almost 2 percent and as low as $36.17 per barrel trading around 0500 GMT, while U.S. West Texas Intermediate (WTI) futures were down 33 cents.

Brent Crude oil has witnessed continued selloff during the last week, and the trend has spilled over in the new week, as the price fell to an eleven-year low. Brent is now trading at $36.4/barrel, a level not seen since July, 2004, and even lower than December 2008, when there was recession in the market.

Production has been on record highs, with US, Russia and Saudi Arabia pumping in huge quantities of crude in the market. As per news reports, supply from Iran is likely to head higher this year by at least half a million barrels per day. Russia, on the back of cheaper Ruble, is producing 10 million barrels per day (bpd). Organization of the Petroleum Exporting Countries (OPEC) output has also boomed to 31.5 million bpd. International Energy Agency (IEA) warned that global oil oversupply could worsen in the new year.

Brent futures fell almost 2 percent and as low as $36.17 per barrel trading around 0500 GMT, while U.S. West Texas Intermediate (WTI) futures were down 33 cents at $34.40 per barrel.

Dollar has been robust since the Fed decided on a 25 bps rate hike, the first in nine years, and this has added to the crude woes. This, in addition to the sluggish demand from European nations, has led to sharp downfall in the prices.