Crude oil tumbled towards $US40 per barrel on Friday morning.
West Texas Intermediate crude futures in New York fell to as low as $US40.47 a share, a drop of more than 3% to the lowest level in about two and a half months.
Crude oil is extending a decline that worsened after data from the Energy Information Administration (EIA) on Thursday showed that US inventories rose for a seventh straight period last week.
The International Energy Agency’s (IEA) monthly report warned on Friday that with a record 3 billion barrels of oil in stockpiles, the “overhang” that first developed in the US is spreading across the world.
And although demand has risen to a five-year high, it’s expected to ease in 2016, as the factors that boosted it fade.
“The impact of oil’s steep price plunge on end users is unlikely to be repeated and economic conditions are forecast to remain problematic in countries such as China,” the IEA said.
There were also a few notable oil-price forecasts this week, including the EIA’s lowered projection for 2016 average oil prices by $US2 per barrel to $US56 per barrel.
Later on Friday, driller Baker Hughes will release its weekly tally of US oil rigs.
This chart shows the decline in oil prices on Friday:
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