Brent oil futures extended its losses to test a fresh low of below $30 a barrel. The level marks the

commodity’s new 12-year low today, further fuelling the global oversupply concerns. On London’s

ICE Futures Exchange, Brent oil for March delivery made a day’s low at $29.70, a barrel, a level last

seen in January 2004. However, the commodity futures recovered slightly to $30.44.

Analyst speak

Brent futures traded on London exchange have dropped 19% in 2016 on the back of worries that

the oil supply glut will continue to haunt for a longer time than anticipated. Also, the supply glut

situation can worsen if Iran will join the global oil market after being released from western

imposed sanctions. According to analysts, Iran has the capacity to add up to 500,000 barrels to the

oil production, which can further send the prices deep red.

Meanwhile, the world has been seeing global oil production outpacing the overall demand after

the supply ramped up in the U.S. shale oil combined with the decision of the Organisation of the

Petroleum Exporting Countries (OPEC) to continue with the existing production to maintain

market share, thereby ruling out any supply cut. If analysts are to be believed, then the supply

situation is set to worsen as oil production continues to accelerate in Saudi Arabia, North America

and Russia.

U.S. crude showing improvement

On the New York Mercantile Exchange (NYMEX), February crude oil was trading at $30.80, up

1.05%. The oil futures settled at $30.48, up by 4 cents during the previous trading session. A

weekly report issued by the U.S. Energy Information Administration showed a sharp rise in both

gasoline and distillate supplies over the last week, implying sluggish demand for oil.

U.S. crude has been showing some revival signs in comparison to Brent following the Congress’

recent decision to lift a ban on oil exports, signalling to improved oil market conditions in the

coming months.