Investing.com - Crude oil prices in Asia on Monday fell sharply with continued oversupply and weak demand seen in place as major producers declined to cut output.
On the New York Mercantile Exchange, crude oil for delivery in January dropped 1.60% to $39.48 a barrel.
Last week, oil prices fell sharply on Friday, as market players reacted to OPEC's decision to leave its production ceiling unchanged at a contentious meeting in Vienna.
As a result, crude prices are expected to remain stubbornly low amid a glut of oversupply on global energy markets.
On the ICE Futures Exchange in London, Brent oil for January delivery sank 84 cents, or 1.92%, on Friday to close the week at $43.00 a barrel. Prices fell to $42.43 on Wednesday, the weakest level since August 24.
The Organization of the Petroleum Exporting Countries decided to maintain current production levels at around 31.5 million barrels per day after the divided group was unable to agree on a strategy to curb the continuing oversupply on global energy markets.
In a statement following the conclusion of the meeting, OPEC said that it would “continue to closely monitor developments in the coming months". The oil cartel's next meeting is scheduled for June.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Market players shrugged off a report from industry research group Baker Hughes (N:N:BHI) late Friday, which showed that the number of rigs drilling for oil in the U.S. decreased by 10 last week to 545. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
The U.S. Energy Information Administration said that crude oil inventories rose by 1.2 million barrels last week, the 10th straight weekly gain. Total U.S. crude oil inventories stood at 489.4 million barrels, remaining near levels not seen for this time of year in at least the last 80 years. The oil market has been on the defensive in recent months amid uncertainty about how quickly the global glut of crude is set to shrink.
In the week ahead, investors will be looking ahead to Friday’s U.S. data on retail sales and inflation for fresh indications on the strength of the economy.
Data last week showed that the U.S. economy created 211,000 jobs in November, beating expectations for 200,000. The unemployment rate held steady at 5.0%, matching forecasts.
The robust data solidified expectations that the Federal Reserve will hike interest rates for the first time since 2006 at its upcoming meeting on December 15-16.
Markets will also be watching a raft of Chinese economic data this week, including a report on the trade balance as well as data on consumer price inflation.