Benchmark Brent crude oil today slides below $55-barrel for first time since May 2009

5 January 2015 1.00pm update

Benchmark North Sea Brent crude oil fell below $55 a barrel for the first time since May 2009 as record supplies from Iraq and Russia bolstered speculation the global glut that drove crude into a bear market last year will persist into 2015.

Futures slid as much as 2.8% in London, extending a loss of 5.1% last week – triggering further forecourt fuel price cuts by major UK supermarkets of up to 2p/ litre today.

Iraq, the second-largest producer in the Organisation of Petroleum Exporting Countries, plans to boost crude exports to a record this month, the Oil Ministry said. Russia’s output rose to a post-Soviet high in December, according to preliminary Energy Ministry data.

Brent slumped 48% last year, the most since the 2008 financial crisis, as OPEC resisted calls to cut output amid a battle with U.S. shale producers for market share.

The 12-member group, which supplies about 40% of the world’s crude, pumped above its target for a seventh straight month in December, according to a Bloomberg  survey.

Brent for February settlement declined as much as $1.70 to $54.72 a barrel on the London-based ICE Futures Europe exchange in London, the lowest since May 6, 2009. It was at $54.74 as at 12.17 pm.

“Rising supply, slowing refinery demand, rising dollar, it is the same factors driving prices,” Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S, said. “With news from Iraq and Russia about increased supply, then the expectations about the glut just continue to grow.”

Iraq plans to expand crude exports to 3.3 million barrels a day this month, a spokesman at the Oil Ministry in Baghdad confirmed. The country exported 2.94 million a day in December, the most since the 1980s, he said.

Russian oil production rose 0.3% last month to a post-Soviet record of 10.667 million barrels a day, according to preliminary data published by the Russian Energy Ministry.