Oil prices continue slide; Brent futures down $2.20

Oil continued its slump to trade below $45 a barrel amid speculation that US crude stockpiles are on the increase, exacerbating a global supply glut that has driven prices to their lowest in more than five-and-a-half years.

Futures fell as much as 3.6 per cent in New York, declining for the third day running.

US crude inventories probably gained by 1.75 million barrels last week, a Bloomberg News survey showed before government data due tomorrow.

The United Arab Emirates, a member of the Organization of Petroleum Exporting Countries, will stand by its plan to expand output capacity even with ''unstable oil prices,'' according to energy minister Suhail Al Mazrouei.

Oil prices sank almost 50 per cent last year, the most since the 2008 financial crisis, as the US pumped at the fastest rate in more than three decades and OPEC resisted calls to cut production.

West Texas Intermediate for February delivery decreased as much as $1.66 to $44.41 a barrel in electronic trading on the New York Mercantile Exchange and was at $44.46 at 3:57 p.m. Singapore time. The contract lost $2.29 to $46.07 on Saturday, the lowest close since April 2009. The volume of all futures traded was more than double the 100-day average.

Brent for February settlement slid as much as $2.20, or 4.6 percent, to $45.23 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of 83 cents to WTI. The spread was $1.36, the narrowest based on closing prices since July 2013.

US crude stockpiles probably rose to 384.1 million barrels in the week ended 9 January, according to the median estimate in the Bloomberg survey of six analysts before the Energy Information Administration's report. Supplies have climbed to almost 8 percent above the five-year average level for this time of year, data from the Energy Department's statistical arm show.

Production accelerated to 9.14 million barrels a day through 12 December, the most in weekly EIA records that started in January 1983. The nation's oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota.

The UAE will continue plans to boost its production capacity to 3.5 million barrels a day in 2017, Al Mazrouei said in a presentation in Abu Dhabi yesterday. The country currently has a capacity of 3 million and pumped 2.7 million a day last month, according to data compiled by Bloomberg.

OPEC, whose 12 members supply about 40 per cent of the world's oil, agreed to maintain their collective output target at 30 million barrels a day at a 27 November meeting in Vienna (See: Oil wilts as OPEC stands by Saudi decision not to cut production). Qatar estimates the global surplus at 2 million a day.

In China, the world's biggest oil consumer after the US, crude imports surged to a new high in December, capping a record for last year. Overseas purchases rose 19.5 per cent from the previous month to 30.4 million metric tons, according to preliminary data from the General Administration of Customs in Beijing today. For 2014, imports climbed 9.5 per cent to 310 million tons, or about 6.2 million barrels a day.