With the OPEC cartel refusing to cut production, the world economy struggling and Iranian oil expected to enter the market next year, the cost of the black gold has been battered to levels not seen since early 2009 during the global financial crisis.
Traders are also awaiting an expected interest rate hike by the US Federal Reserve this week, which could lift the dollar, in turn making oil more expensive to customers using weaker currencies and hitting demand.
In early trade US benchmark West Texas Intermediate was 16 cents down at $35.46 around 0500 GMT while Brent crude was 26 cents lower at $37.67.
Prices plunged more than 12 percent last week after the Organization of the Petroleum Exporting Countries, which produces about 40 percent of global oil supply, decided on December 4 not to reduce its output levels.
And last Friday the International Energy Agency warned that it sees the global oil glut worsening through late 2016.
OPEC’s refusal to move in the face of slumping prices comes as it seeks to preserve its market share against higher-cost producers.
Iran has said it would not bow to pressure for it to avoid increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear programme.
“Prices are likely to remain under pressure as the market will be closely watching the Federal Reserve’s policy-making this week,” said Sanjeev Gupta. who heads the Asia-Pacific oil and gas practice at professional services organization EY.
Traders will also be looking for economic data from Europe on industrial production for October and manufacturing data from energy guzzler China due this week, he added.
Experts said it was unlikely there was any impact from the agreement Saturday in Paris by world leaders to limit global warming to below two degrees Celsius (3.6 degrees Fahrenheit) over pre-industrial levels.
SBI Securities Nobuyuki Fujimoto said: “Global warming is a problem, but it doesn’t mean we won’t use energy at all. Since it’s difficult to rely on nuclear power now and renewable energy is limited, we have to use thermal power.”