Brent crude oil hits five-year low below $66 on oversupply

By David Sheppard

LONDON (Reuters) - Brent crude oil fell to a 5-year low below $66 a barrel on Tuesday, sliding for a sixth consecutive session on signs of a growing supply glut.

Prices fell by more than 4 percent in the previous session and are down 43 percent since June, as fast-growing U.S. shale output has hurt the ability of the Organization of the Petroleum Exporting Countries (OPEC) to manage supply.

Industry sources said Tuesday that top OPEC oil exporter Saudi Arabia will keep crude sales at full contracted volumes for Asian term buyers next month in the latest sign Gulf producers are ready to ride out plunging prices.

Oil is likely to remain around $65 a barrel for the next six or seven months, the chief of Kuwait's national oil company said on Monday.

"Short-term sentiment is to remain weak for crude oil, given the oversupply expected in 2015," ANZ analysts said in a note.

Brent crude for January delivery fell as low as $65.29 on Tuesday, its weakest since September 2009. It was trading down 28 cents at $65.91 by 0858 GMT. Brent fell by 4.2 percent or $2.88 on Monday in its third-largest one-day loss this year.

U.S. crude was down 3 cents to $63.01 a barrel, paring losses after briefly hitting $62.25, its lowest since July 2009. It fell by 4.2 percent or $2.79 on Monday.

"Although talks of oil reaching its bottom are more rampant, we fail to see a reversal coming without stronger fundamentals," said Daniel Ang of Phillip Futures in a note.

Norwegian brokerage DNB Markets said on Tuesday that Brent could trade in the $50s in the first half of 2015, lowering its average year forecast by $10 to $70 per barrel.

Brent prices averaged around $110 between 2011 and 2013 and topped $115 in June. Losses accelerated in late November after OPEC decided against cutting its output target.

Since then, Saudi Arabia and OPEC's second-largest producer, Iraq, have both cut monthly prices for the United States and Asia, in a move some analysts say shows OPEC members are competing for market share.

New U.S. projections show oil production from the big three U.S. shale plays should grow by more than 100,000 barrels per day by January.

However, many companies are starting to make deep cuts to spending for next year.

(Additional reporting by Adam Rose in Beijing; editing by Clarence Fernandez and Anupama Dwivedi)