Crude oil prices closed lower on Thursday after earlier extending their slide to near seven-year lows as traders looked beyond a drop in U.S. crude stockpiles to focus on a global supply glut, while a stronger dollar weighed on commodities.
Futures of Brent and U.S. crude's West Texas Intermediate (WTI) struck February 2009 lows for a fourth day in a row in continued fallout from an OPEC meeting last week that abandoned price support measures. Unimpressive U.S. government inventory data from Wednesday added to the drag.
In its latest monthly report on Thursday, the OPEC forecast that oil supply from countries outside the group — including the United States and Russia — would fall by 380,000 barrels per day (bpd) next year, three times more than previously expected.
Despite that, OPEC left its forecast for 2016 world oil demand unchanged at 1.25 million bpd. It said its group output rose by 230,000 bpd in November to 31.7 million bpd.
OPEC's report "fell easily within (the) range of expectations," Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates, explaining its lack of positive impact.
He also said the weekly drop of 3.6 million barrels in U.S. crude stocks announced by the government on Wednesday was seen as refiner destocking before the end of the U.S. tax year. "Additional U.S. commercial crude stock draws will be shrugged off," he added.
Brent futures were down 39 cents to $39.72 per barrel at 2:32 p.m. EDT, hitting a near-seven year low at $39.50.
U.S. WTI crude futures settled 40 cents lower, or 1.08 percent, at $36.76 a barrel, near lows not seen since 2009.
Alan Knuckman of Barchart Bulls-Eye told CNBC's "Closing Bell" that 2009's $33 was an extreme low, making it a level to lean on, now.
"You're seeing a lot of signs of the market reaching maximum pain," he said. "I saw a newspaper article that Alaska is looking to institute an income tax because they're not generating enough oil revenue. These are the type of things you see at the bottom of a market."
Knuckman also said he thinks the dollar is a "wild card" in this market.
"The fact is that the Euro currency meets new relative highs yesterday, the dollar's been drifting lower. That could be a positive, but we want to see a couple consecutive days, not just one day of energy stocks moving up. We need to see a sustained bounce and see how the shorts recover," he added.
The dollar rose for the first time in three days, making commodities denominated in the greenback less affordable to users of the euro and other currencies.
U.S. gasoline futures were a bright spot on the petroleum complex, rallying on concerns over a refinery outage and possible cuts in production.
"Significantly decreased activity has been observed from the unit since that time," market intelligence firm Genscape said in a report.
The profit for refining a barrel of crude into gasoline, meanwhile, rose to its highest seasonal level since 2012. Traders cited concerns about refiners cutting runs due to weak demand for distillates, which includes diesel, forecast from expectations of a mild winter.