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West Texas Intermediate oil prices crashed to a fresh seven-year low on Friday, after data showed that rigs drilling for oil in the U.S. rose last week, underlining concerns over robust domestic production.
On the New York Mercantile Exchange, crude oil for delivery in January shed 22 cents, or 0.63%, to close the week at $34.73 a barrel. It earlier touched $34.29, the lowest since February 2009. The more actively traded February contract ended at $36.06.
For the week, New York-traded oil futures declined 89 cents, or 2.49%, the third straight weekly loss. U.S. oil futures are down nearly 35% so far this year amid worries over ample domestic supplies.
The U.S. Energy Department Wednesday reported an unexpected 4.8 million-barrel increase in U.S. crude stockpiles last week. At 490.7 million barrels, U.S. oil inventories remain near levels not seen for this time of year in at least the last 80 years.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for February delivery dipped 18 cents, or 0.49%, on Friday to close the week at $36.88 a barrel. Prices slumped to $36.14 on December 14, a level not seen since the depths of the 2008 global financial crisis.
On the week, London-traded Brent futures dropped 97 cents, or 2.77%, the third consecutive weekly decline. Brent oil prices are on track to post an annual decline of 36% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $2.15 a barrel, compared to $2.11 by close of trade on Thursday.
The price gap between the two benchmarks narrowed to the smallest level in 11 months earlier this week, following Congress’ decision to lift a ban on domestic oil exports, signaling that the U.S. oil market is likely to grow tighter, while a global glut gets worse.
In the week ahead, trading volumes are expected to remain light due to the Christmas holiday and as many traders already closed books before the end of the year, reducing liquidity in the market and increasing the volatility.