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UPDATE 9-Oil down 3 pct, Brent near 11-year low on fears of weaker 2016

Published 2015-12-28, 12:11 p/m
© Reuters.  UPDATE 9-Oil down 3 pct, Brent near 11-year low on fears of weaker 2016
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* Japan's oil product sales fall to 46-year low
* Saudi Arabia posts record budget deficit on oil collapse
* U.S. crude trades just above below Brent

(New throughout, updates prices and market activity, adds more
comments from analysts)
By Barani Krishnan
NEW YORK, Dec 28 (Reuters) - Oil fell 3 percent on Monday,
with global benchmark Brent back near 11-year lows as last
week's short-covering dried up and players worried that crude
prices had more room to swoon.
U.S. gasoline futures RBc1 slid about 2 percent as the
selloff extended to refined oil products as well, although
heating oil HOc1 rebounded on expectations of colder weather.
Crude futures slumped in Asian trading as Japanese data
showed a 46-year low in oil sales in the world's fourth largest
crude buyer. They slid more in the New York
session, as some traders reckoned the two-day pre-Christmas
rebound, where crude rose about $2 a barrel, had been overdone.
"Volume isn't great, which is typical for this time of year,
and most guys are either flat on their books and positioning
themselves for a weaker first quarter in 2016," said Tariq
Zahir, an oil bear at Tyche Capital Advisors in Long Island, New
York.
Brent was down 98 cents at $36.93 a barrel by 11:35 a.m. EST
(1635 GMT), falling to a session low of $36.56 earlier. It hit a
2004 low of $35.98 on Tuesday.
U.S. crude's West Texas Intermediate (WTI) futures fell
$1.25 to $36.85, slipping to $36.66 at one point. Oil bears are
looking to beat WTI's previous low of $32.40 in December 2008.
"A bearish trading stance is still being advised as we still
view an ultimate price decline in nearby WTI and Brent futures
to the $32.50 area," said Jim Ritterbusch at Chicago-based oil
markets consultancy Ritterbusch & Associates.
Figures from the Organization of the Petroleum Exporting
Countries imply an oil glut of more than 2 million barrels per
day, equal to more than 2 percent of world demand.
Crude prices have plunged nearly 70 percent from highs above
$100 a barrel in June 2014 after OPEC, led by top exporter Saudi
Arabia, dropped its longstanding policy of cutting output to
support prices in favour of defending market share.
While the collapse has partly achieved OPEC's goals by
curbing growth of competing supplies, it has also put the
finances of oil producing nations under strain.
Saudi Arabia announced plans to shrink a record state budget
deficit with spending cuts and a drive to raise revenues from
sources other than oil. Still, state-owned Saudi Aramco said it
will continue investing in oil and gas production, expecting a
price rebound in 2016.

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