OPEC countries are cutting price to get market share amid a seemingly relentless build in oversupply
Oil slipped towards an 11-year low on Thursday, dented further by a seemingly relentless build in oversupply, and as the dollar strengthened after the US Federal Reserve raised interest rates for the first time in nearly a decade.
Brent crude for February delivery, the front-month contract from Thursday, fell 20 cents to $37.19 a barrel by 0910 GMT. The global benchmark lost 3.3 percent in the previous session.
If it falls below $36.20, it will hit the lowest since July 2004.
Government data showed a surprise build in US inventories on Wednesday, adding to a global glut that has contributed to a near 17 percent slump this month alone. Brent has tumbled from a high above $115 in June last year.
West Texas Intermediate for January delivery, the front-month contract, was down 5 cents at $35.47 a barrel after finishing nearly 5 percent lower on Wednesday.
"There's just no reason to want to buy oil," said Jasper Lawler, an analyst at CMC Markets.
Another potential source of supply for international markets would be US crude should lawmakers vote to lift a ban on exports as early as Friday.
The likely lifting of the ban has seen Brent crude's premium to WTI almost vanish. The premium was above $13 per barrel in March.
"OPEC countries are cutting price to get market share, and they'll have to do so even more if US oil comes onto the international market," Lawler said.
The Fed raised rates on Wednesday, a sign it believes that the US economy had largely overcome the calamity that was the 2007-2009 financial crisis.
Higher US rates typically support the dollar, making dollar-priced oil more costly for holders of other currencies and undermining demand.
The dollar added almost 0.8 percent against a basket of major currencies.
Adding to the bearish global picture, OPEC producers see scant chance of a significant rise in oil prices in 2016 as extra Iranian production could add to the glut and the prospect of voluntary output restraint remains remote.