Oil prices drop for 7th session on oversupply worries

By Aaron Sheldrick

TOKYO (Reuters) - Crude oil futures fell for a seventh straight session on Monday, their longest losing streak since mid-2014, as a forecast from the International Energy Agency (IEA) that the global supply glut was likely to deepen next year dragged on prices.

Brent crude fell below $38 a barrel for the first time since December 2008 on Friday after the IEA said demand growth was slowing while OPEC output remained high. U.S. crude, West Texas Intermediate (WTI), settled in the $35 territory for the first time since February 2009. [nL8N1400YJ]

Front month WTI was down 10 cents at $35.52 a barrel by 0727 GMT, while Brent was down 10 cents to $37.83 a barrel.

Both benchmarks have fallen every day since the Organization of the Petroleum Exporting Countries (OPEC) on Dec. 4 abandoned its output ceiling. In the past six sessions, they have shed more than 13 percent each.

OPEC has been pumping near record levels since last year in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.

New supply is likely to hit the market early next year as OPEC member Iran ramps up production once sanctions are lifted as expected following the July agreement on its disputed nuclear programme, BMI Research said in a note.

"All new production will be earmarked for exports," BMI Research said. "In addition to volumes released from storage, Iran will be able to increase crude oil and condensates exports by a maximum of 700,000 b/d by end-2016," it said.

Iran's crude oil exports are set to hit a six-month high in December as buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year.

The Middle Eastern country is on track to ship 1.26 million barrels a day (bpd) of crude this month, according to an industry source with knowledge of tanker loading schedules.

OPEC supply is likely to increase by 1 million bpd next year, Morgan Stanley analysts said in a research note Monday.

"Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi," he said.

(Reporting by Aaron Sheldrick; Editing by Himani Sarkar and Christian Schmollinger)