As trading resumed following the new year break, benchmark Brent crude oil slipped below $56 a barrel on Friday.
After the savaging in the second half of last year, oil prices remain hostage to overproduction.
Brent has slumped to its lowest in more than five years, as top exporter Saudi Arabia and other large Gulf producers have declined to cut production in the face of fast-growing US shale oil output, despite pleas from other members in the Organization of the Petroleum Exporting Countries (OPEC).
“With no production cuts in the offing and a significant demand response years away, oversupply looks to be with us for a while,” said RBN Energy analyst Rusty Braziel in a note. “$100 a barrel crude oil prices are in the rear view mirror, at least for a couple of years.”
However, traders said there are investors who are placing buy orders betting prices will bounce back a bit this year as expensive oil projects are put on hold or cancelled.
At the same time we learned that Russia’s crude output last year hit a post-Soviet record high at an average of 10.58 million barrels per day.
Much of the increase came from non-state owned small producers. They increased their output by 11 percent.
Exports to China reached a new high, up 43 percent on the year as Russia seeks to diversify its energy customers.
Oil and gas revenues fund about half of Russia’s budget.
The country’s economy is slipping into recession partly because of cheap oil.
The International Energy Agency (IEA) expects Russian oil output to fall by 1.0 percent in 2015.