Crude dropped to the lowest in more than 12-years in New York after the International Energy Agency said the global market could “drown in oversupply.”

West Texas Intermediate futures fell 3.3 percent. The IEA cut 2016 estimates for global oil demand as China’s economic growth weakens, and raised forecasts for output outside the Organization of Petroleum Exporting Countries. The removal of restrictions on Iranian crude sales is seen prolonging the supply glut. Brent futures rebounded as data showed Chinese growth was in line with government targets.

Oil is down 23 percent this year amid volatility in Chinese markets and an expected surge in Iranian exports. The International Monetary Fund cut its world growth outlook for 2016 to 3.4 percent from 3.6 percent as the commodities slump and political gridlock push Brazil deeper into recession, plunging oil prices hobble Middle East crude producers, and the rising dollar curbs U.S. prospects.

WTI for February delivery, which expires Wednesday, slipped 96 cents to close at $28.46 a barrel on the New York Mercantile Exchange. It was the lowest settlement since September 2003. The more-active March future decreased 82 cents to $29.57. Monday’s transactions were booked with Tuesday’s because of the Martin Luther King Jr. holiday. Total volume traded was 68 percent higher than the 100-day average at 2:45 p.m.

Brent for March settlement climbed 21 cents, or 0.7 percent, to end the session at $28.76 a barrel on the London-based ICE Futures Europe exchange. The contract fell 1.4 percent to $28.55 on Monday, the lowest close since December 2003. Brent closed at an 81-cent discount to March WTI.

Source : bloomberg