US crude hits new 12-year low below $28

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Singapore (AFP)

US crude hit new 12-year lows below $28 a barrel in Asia on Wednesday after the International Energy Agency (IEA) warned that the oil market could "drown in oversupply".

West Texas Intermediate (WTI), the US benchmark, struck a low of $27.92 a barrel at one point before recovering slightly. It was trading at $28.13, down 33 cents, or 1.16 percent, at around 0215 GMT.

The last time WTI closed below $28 was in September 2003.

Brent crude was trading nine cents lower at $28.67. Brent itself fell below $28 on Monday.

"The EIA report played a big part in the price decline," said Phillip Futures analyst Daniel Ang, adding that this underscored the current "bearishness in the market".

He also said that the WTI February contract was due to expire later in the week, which could have prompted traders to roll over their positions to the March contract.

The EIA said Tuesday oil prices are set to fall further this year as supply vastly exceeds demand, with major oil exporter Iran's return to the market offsetting any production cuts from other countries.

"Can it go any lower?" the IEA said. "Unless something changes, the oil market could drown in oversupply. So the answer to our question is an emphatic yes. It could go lower."