UPDATE 9-Oil eyes 11-year low as IEA warns of worse glut, U.S. stays warm

* Brent under $38; will hit 11-year low if it takes out
$36.20
* WTI reaches $35 territory; previous low was $32.40 in 2008
* IEA says oil consumption has likely peaked in Q3 this year
* 2016 demand growth seen slowing to 1.2 mln barrels per day

(Updates prices, adds new milestones, U.S. rig data, comment)
By Barani Krishnan
NEW YORK, Dec 11 (Reuters) - Oil prices extended their
freefall on Friday, flirting with 11-year lows, after the
International Energy Agency (IEA) warned that global oversupply
of crude could worsen next year.
Brent and U.S. crude's West Texas Intermediate (WTI) futures
fell as much as 5 percent on the day and 12 percent on the week
as mild pre-winter weather and a plummeting U.S. stock market
added to the toll on oil prices. .N
Oil traders and analysts were perplexed by the intensity of
the decline, coming exactly a week after Dec. 4 meeting of the
Organization of Petroleum Exporting Countries all but abandoned
price support for crude after removing its production ceiling in
an oversupplied.
"Very tough to find cause to get bullish here," said Peter
Donovan, broker at Liquidity Energy in New York.
"The bearish IEA report has put further selling pressure on
an already soft market. The back months have actually been hit
a bit harder than the fronts as the report dispelled thoughts
that a price recovery was on the not-too-distant horizon."
Brent crude futures LCOc1 slipped below $38 a barrel for
the first time since December 2008, trading down $1.88, or
nearly 5 percent, at $37.85 by 1:05 p.m. EST (1805 GMT).
Brent's session low was $37.36 - barely a dollar above
the$36.20 hit during the financial crisis. If it falls through
that, it will go to June 2004 lows, when it traded at around $34
a barrel.
WTI CLc1 entered the $35 territory for the first time
since February 2009. It was down $1.15, or 3 percent, at $35.61,
hitting an intraday low at $35.35. WTI's financial crisis low
was $32.40 in December 2008.
The market pared losses just slightly after data showing
U.S. drillers cut the number of oil rigs operating in the
country for a 14th week out of 15 to the least since April 2010.
RIG/U
The IEA, which advises developed nations on energy, warned
that demand growth was starting to slow.
"Consumption is likely to have peaked in the third quarter
and demand growth is expected to slow to a still-healthy 1.2
million bpd (barrels per day) in 2016, as support from sharply
falling oil prices begins to fade," the energy watchdog said in
its monthly oil report.
Crude prices have fallen with little restraint since the
Organization of the Petroleum Exporting Countries' meeting last
week. Data also showed OPEC pumped 31.7 million bpd in
November, more oil than any month since late 2008.
Banks such as Goldman Sachs (N:GS) have said oil could fall to $20
a barrel if the world runs out of capacity to store unwanted
supply.
"The WTI and Brent markets are trending at this point with
no real interest from anyone to buy," said Scott Shelton, broker
and commodities specialist at ICAP (L:IAP) in Durham, North Carolina.
"The forecast remains incredibly warm for the U.S. That's a
large drag on demand and means less demand for distillates and
more for export, which drags down the rest of the world as
well."
U.S. weather forecasts call for warmer-than-normal
temperatures through Christmas that would curb heating demand,
boosting U.S. gasoline futures higher than heating oil prices in
December for the first time in at least five years.
Gasoline's premium to heating oil for the January contracts
1RBc1-HOc1 widened as the heating oil contract HOc1 slumped
almost 6 percent while gasoline RBc1 fell 0.4 percent.

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CHART-Crude oil prices since 2008: http://tmsnrt.rs/1Y72jMS
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