Oil prices remained in the doldrums during their final Asian- hours trading session of 2015 after record crude inventories in the US reinforced concerns about a global supply glut that has pulled down prices by a third over the past year.
Crude inventories in the US rose 2.6 million barrels last week, the Energy Information Administration said. Analysts polled by Reuters had expected 2.5 million barrels.
Crude prices held losses after falling more than 3 per cent in the previous session, with West Texas Intermediate crude futures trading around US$36.70 per barrel yesterday and Brent around US$36.60 per barrel. Both benchmarks are down by around a third over the past year.
The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as US$20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.
Morgan Stanley said in its outlook that "headwinds (are) growing for 2016 oil". The bank cites ongoing increases in global supplies, despite some cuts by US shale drillers in particular, as well as a slowdown in demand as the main reasons.
Traders expect some US oil to be taken out of America and supplied to global markets, following the surprise lifting of a decades-old US crude export ban in December.
Oil prices began falling in mid-2014 as ballooning output from the Organisation of Petroleum Exporting Countries (Opec), Russia and US shale drillers started to outpace demand.
The downturn gained pace at the end of 2014 after a Saudi-led Opec decided to keep production high to defend global market share rather than cut output to prop up prices.
A year on and the oil downturn has turned into a rout with Brent prices briefly falling below US$36 per barrel to levels last seen more than a decade ago, effectively wiping out the gains from a decade- long commodity super-cycle sparked by China's unprecedented energy demand boom.
The downturn has caused pain across the supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.
Analysts estimate global crude production exceeds demand by anywhere between half a million and two million barrels daily.