Oil prices started the last week of the year by falling hard after a brief rally, under pressure from slowing global demand and abundant supplies, with Saudi Arabia signaling no change to its oil policies and Iran preparing to ramp up exports.
Crude declined more than 3% Monday to trade below $37 a barrel. Crude had topped $38 per barrel on Thursday, the highest it has been since it started the month above $41.
Oil is down more than 11% for the month and is hovering around seven-year lows amid a glut of production and weak demand in China.
Both crude benchmarks are down by more than two-thirds since prices started tumbling in June 2014 on the back of a U.S. shale oil boom and OPEC kingpin Saudi Arabia's decision to pump near record volumes of oil to stifle higher-cost rival producers.
On Monday, Saudi Arabia announced plans to shrink its record $98 billion state budget deficit with spending cuts, reforms to energy subsidies and a drive to raise revenues from taxes and privatization.
Saudi Arabia and Iraq have added extra barrels to the market over the course of 2015 and the world's production has at times exceeded demand by over 2 million barrels per day this year.
The glut is expected to further aggravate in 2016 as Iran is pledging to add at least another 0.5 million bpd into the market when and if Western sanctions on it are lifted.
Saudi Arabia and its Gulf allies the UAE and Kuwait have said they are counting on global demand growth to help rebalance the market over the course of 2016.
But there are increasing signs that demand might slow much sharper than expected after a spike in 2015.
Oil analysts JBC Energy said that oil product demand growth in Europe turned negative in October -- a loss of 170,000 barrels per day (bpd) year-on-year -- for the first time in 10 months and that diesel and gasoline demand growth in China, one of the strongest price supports of the past year, was also slowing.
In the short-term, colder weather entering Europe and North America following an unusually warm start to winter may provide a mid-term boost to prices.
One change in oil trading has been that WTI flipped to a premium versus Brent this month after the United States lifted a decades-old ban on exporting U.S. crude oil.
Analysts expect this price structure to stay in place, should global markets suffer from slowing demand and a continuing oil surplus while domestic supplies in the United States tighten.