Oil trades at 5 1/2-year low after Russia, Iraq boost supplies

Oil fell to the lowest since mid-2009 amid growing supply from Russia and Iraq and signs of manufacturing weakness in Europe and China.

Futures headed for a sixth weekly loss in New York and London. Oil supplies in Iraq and Russia surged to the highest level in decades in December, according to data from both countries’ governments. Euro-area factory output expanded less than initially estimated in December. A manufacturing gauge in China, the world’s second-largest oil consumer, fell to the weakest level in 18 months, government data showed Friday.

“China PMI was more of the same while we are seeing weaker than expected PMI in Europe,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said. “This adds to the support for the dollar. So, we are kicking off 2015 with a strong dollar and weak oil theme.”

Oil slumped 46 percent in New York in 2014, the steepest drop in six years and second-worst since trading began in 1983, as US producers and the Organisation of Petroleum Exporting Countries ceded no ground in their battle for market share.

OPEC pumped above its quota for a seventh month in December even as US output expanded to the highest in more than three decades, according to data compiled by Bloomberg.

Brent for February settlement fell as much as $1.85, or 3.2 percent, to $55.48 a barrel on the London-based ICE Futures Europe exchange, the lowest since May 2009. The European benchmark crude slumped 48 percent last year, the second-biggest annual loss on record behind a 51 percent tumble in the 2008 financial crisis.

In China, the official Purchasing Managers’ Index dropped to 50.1 in December from 50.3 the previous month, according to data from the statistics bureau and the China Federation of Logistics and Purchasing. A separate manufacturing reading from HSBC Holdings plc and Markit Economics on December 31, also fell.

Oil supplies in Iraq and Russia surged to the highest level in decades, signaling no respite in early 2015 from the glut that has pushed crude prices to their lowest in five years. The two countries provided 15 percent of world oil supply in November, according to the IEA.

Russian oil production rose 0.3 percent in December to a post-Soviet record of 10.667 million barrels a day, according to preliminary data e-mailed Friday by CDU-TEK, part of the Energy Ministry. Iraq exported 2.94 million barrels a day in December, the most since the 1980s, said Oil Ministry spokesman Asim Jihad.

OPEC’s production slid by 122,000 barrels a day from November to 30.24 million last month, led by losses in Saudi Arabia , Libya and the United Arab Emirates , a Bloomberg survey of companies, producers and analysts shows. The 12-member group, which supplies about 40 percent of the world’s crude, has a collective target of 30 million a day.

US oil production averaged 9.12 million barrels a day in the week ended December 26, according to the Energy Information Administration. Output increased to 9.14 million a day through December 12, the most in weekly data that started in January 1983.