West Texas Intermediate and Brent extended their decline from the lowest close in five years as producers in the U.S., fighting for market share with OPEC members, increased the number of drill rigs in operation.

Futures dropped as much as 1.8 percent in New York and 1.9 percent in London. Operating drill rigs in the U.S., the world’s biggest oil consumer, rose to the most since mid-November, Baker Hughes Inc. said Dec. 5. The oil market is poised to get “worse before it gets better,” according to Morgan Stanley.

Crude is trading in a bear market as U.S. production gains even after the Organization of Petroleum Exporting Countries maintained its output quota. Falling prices will put “short-term pressure” on Iran’s budget, Hassan Rouhani, the president of OPEC’s fifth-biggest member, said yesterday in a speech to the country’s parliament in Tehran, according to the semi-official Iranian Students’ News Agency.

WTI for January delivery dropped as much as $1.21 to $64.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $64.71 at 10:44 a.m. Sydney time. The contract slid 97 cents to $65.84 on Dec. 5, the lowest close since July 2009. The volume of all futures traded was about 21 percent below the 100-day average. Prices have decreased 34 percent this year.

Brent for January settlement declined as much as $1.34 to $67.73 a barrel on the London-based ICE Futures Europe exchange. Prices lost 57 cents to $69.07 on Dec. 5, the lowest since October 2009. The European benchmark crude was at a premium of $3.14 to WTI, compared with $3.54 a week ago.

Source : Bloomberg