Oil prices have declined again, hitting the lowest level since 2003, with the International Energy Agency's (IEA) warning of high stockpiles ramping up the urgency to sell, according to The Australian newspaper.
Light, sweet crude for March delivery settled down 5.9% to $27.94 a barrel on the New York Mercantile Exchange. Prices have dropped for six out of the past seven sessions for a loss of 16%, according to the report.
Brent, the global benchmark, fell 7.2% to $30.51 a barrel on ICE Futures Europe.
In its monthly market report, the IEA said crude-oil prices are likely fall even further as the world's vast oversupply of petroleum only got worse in January, with a surge in production from OPEC. Commercial oil stockpiles rose to more than three billion barrels in December and are likely to keep building in the first quarter, a time of year when stockpiles usually shrink, the IEA said.
The IEA also reported there are ominous signs for oil consumption this year, with "risks to growth in Brazil, Russia and of course slower growth in China." The IEA said it saw no reason yet to change its demand-growth outlook of 1.2% for the year – a "very respectable rate" but "economic headwinds suggest that any change will likely be downward."
At the same time, Kuwait and Iran announced plans to increase crude oil production this year. Taking into account the negative trends which affect oil markets, the IEA lowered its forecast for average Brent crude oil price in 2016 to about $37 per barrel, which is almost $3 lower compared with the previous month's forecast.
At this, a growing number of analysts predict the oil price could drop to $20 per barrel.