Oil extends drop from 5 1/2-year low on supply glut speculation

Futures in London dropped as much as 1.9 percent, after sliding 5.1 percent last week. Iraq plans to boost crude exports this month, according to the oil ministry in the second-largest producer of the Organization of Petroleum Exporting Countries. Sanford C. Bernstein cut its Brent forecasts for this year amid "supply strength, lower-than-expected demand together with spare capacity and inventory increases" seen in 2014. "Iraq's crude production is one of the contributors to the glut we've been seeing," Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. "The glut is expected to continue if demand fails to catch up with supplies." Brent for February settlement fell as much as $1.05 to $55.37 a barrel in electronic trading on the London-based ICE Futures Europe exchange, and was at $55.40 at 12:05 p.m. Seoul time. The European benchmark grade slumped 48 percent last year, and capped a sixth weekly decline on Jan. 2. It traded at a premium of $3.83 to West Texas Intermediate, compared with $3.73 on Friday. WTI for February delivery slid as much as $1.29, or 2.5 percent, to $51.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 3.7 percent to $52.69 last week. Total volume of all futures traded was about 72 percent more than the 100-day average. Iraq Supplies Oil slumped more than 45 percent last year, the steepest annual decline since the 2008 financial crisis, as OPEC resisted calls to trim output amid a battle for market share with U.S. rivals. The group pumped above its quota for a seventh month in December even as U.S. production expanded to the highest level in more than three decades. Iraq plans to increase its exports to 3.3 million barrels a day this month, Asim Jihad, a spokesman at Iraq's oil ministry, said by phone yesterday. The country exported 2.94 million barrels a day in December, the most since the 1980s, according to Jihad. Iraq reached a deal with its semi-autonomous Kurdish region last month over the Kurds' oil exports through Turkey, after years of disagreement on the territory's right to independently develop its energy resources. The agreement allows the shipment of as much as 550,000 barrels a day from northern Iraq to the port of Ceyhan on the Mediterranean, along a pipeline to the Turkish border operated by the Kurdistan Regional Government. Venezuela Meeting Bernstein cut its Brent forecast for 2015 to $80 a barrel from a previous estimate of $104, according to an e-mailed report. It also reduced its prediction for 2016 to $90 a barrel from $109 previously. Venezuela President Nicolas Maduro is traveling to China to hold talks on financing and energy and will visit other OPEC member nations to develop an oil-pricing strategy. Maduro is seeking to pull the nation from recession, as plunging oil prices and shrinking gross domestic product sap government revenue. He will meet Chinese President Xi Jinping as he seeks to "confront" the decline in Venezuela's income. The slump in oil prices has forced the government to review "all investment plans" and seek new ways to obtain foreign currency, he said. In Russia, the biggest crude producer, oil output rose 0.3 percent in December to a post-Soviet record of 10.667 million barrels a day, according to preliminary data e-mailed by CDU-TEK, part of the Energy Ministry.