Oil declined to the lowest level since 2008 in London amid estimates that OPEC’s decision to effectively scrap production targets will keep the market oversupplied.

Brent futures declined as much as 1.8 per cent for a sixth consecutive loss.

The global surplus will persist at least until late 2016 as demand growth slows and the group shows “renewed determination” to maximise production, the International Energy Agency said Friday.

The Organisation of Petroleum Exporting Countries chose not to curb output at its December 4 meeting.

Oil prices have slumped to levels last seen during the global financial crisis as a result of OPEC’s strategy to defend market share against higher-cost producers.

The group’s production rose to a three-year high in November, it said in a report Thursday, as surging Iraqi volumes more than offset a pullback by Saudi Arabia.

“Too much oil is being produced at the moment,” analysts at Commerzbank led by Eugen Weinberg in Frankfurt said in a report.

“There is unlikely to be any kind of ‘happy ending’ for oil prices this year.”

OPEC Supply Brent for January settlement declined as much as 73 cents to $39 a barrel on the London-based ICE Futures Europe exchange, the lowest since December 31, 2008, and traded for $39.03 a barrel at 10.32am local time. It has decreased 9.2 per cent this week.

The European benchmark crude was at a premium of $2.77 to WTI. West Texas Intermediate for January delivery was at $36.25 a barrel on the New York Mercantile Exchange, down 51 cents.

The contract dropped 40 cents to $36.76 on Thursday, the lowest close since February 2009.

The volume of all futures traded was about 13 percent above the 100-day average.

OPEC is displaying hardened resolve to maintain sales volumes even as prices fall in an oversupplied market, the IEA said Friday in its monthly report.

While its policy is hitting rivals, triggering the steepest drop in non-OPEC supply since 1992, world oil inventories will likely swell further once Iran restores exports on the completion of a deal to lift sanctions, it said.

Bloomberg