Crude oil extends drop below $60 as IEA cuts forecast

Benchmark U.S. oil prices extended losses below $60 a barrel as the International Energy Agency cut its global demand forecast for the fourth time in five months.

West Texas Intermediate crude is poised for a weekly decline of 11 percent while Brent has lost 9 percent. The IEA reduced its estimate for oil demand growth in 2015 by 230,000 barrels a day, the agency said in a report today. U.S. output, already at three-decade high, will continue to rise in 2015, the IEA said.

"In the short term supply is still stronger than demand," said Gareth Lewis-Davies, a London-based analyst at BNP Paribas SA. "We are going to see further inventory builds in the first half, hence the realization of further pressure on oil prices."

Both benchmarks have collapsed about 20 percent since Nov. 26, the day before the Organization of Petroleum Exporting Countries agreed to leave its production limit unchanged at 30 million barrels a day. Saudi Arabia, Iraq and Kuwait, the group's three biggest members, this month deepened discounts on shipments to Asia, bolstering speculation that they're fighting for market share.

WTI for January delivery dropped $1.25, or 2.1 percent, to $58.70 a barrel at 10:09 a.m. on the New York Mercantile Exchange after touching $58.27, the lowest since May 2009. Total volume was about 58 percent above the 100-day average for the time of day. Prices have decreased 40 percent this year.

Brent for January settlement slid $1.02, or 1.6 percent, to $62.66 a barrel on the London-based ICE Futures Europe exchange after reaching $62.37, the lowest since July 2009. Prices are down 43 percent in 2014.

The IEA, the Paris-based adviser to 29 nations, boosted projections for supplies outside OPEC in 2015 by 200,000 barrels a day, forecasting output will expand by 1.3 million barrels a day to 57.8 million a day. Production rising faster than demand could strain some nations' ability to store oil by the middle of next year, it predicted.

The IEA cut projections for the amount of crude OPEC will need to provide next year by 300,000 barrels a day to 28.9 million. OPEC gave the same forecast, the lowest since 2003, in its monthly report on Dec. 10.