LONDON (Reuters) - Brent crude oil fell almost $2 a barrel on Monday to a new five-year low on predictions that oversupply would keep building until next year after OPEC decided not to cut output.
"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.
In a report dated Dec. 5, the U.S. investment bank said oil prices could fall as low as $43 a barrel next year. The bank cut its average 2015 Brent base-case outlook by $28 to $70 per barrel, and by $14 to $88 a barrel for 2016.
Brent crude for January was down $1.45 at $67.62 a barrel by 1030 GMT, having fallen $1.72 to $67.35 -- its lowest since October 2009.
U.S. crude was down $1.16 at $64.68 a barrel, after hitting a session low of $64.63. The U.S. contract, also known as West Texas Intermediate, touched $63.72 last week, its lowest since July 2009.
At a meeting last month, top oil exporter Saudi Arabia resisted calls from poorer members of the Organization of the Petroleum Exporting Countries to reduce production, fuelling a further slide in prices, which have lost more than 40 percent since June.
Signs that the U.S. shale industry has yet to be hit by the slump in crude prices, adding three new oil-drilling rigs in the last week, further depressed the market.
"It was just a small increase, but nevertheless it was an increase despite the sharp price drop," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
"Given continued oversupply and still no sign yet that U.S. oil production starts to show any reaction, perhaps prices will continue to head lower," he added.
Mixed Chinese trade data also unsettled prices.
China's imports shrank unexpectedly in November, falling 6.7 percent, while export growth slowed, fuelling concerns the world's second-largest economy could be facing a sharp slowdown.
China's crude oil imports rose 9 percent in November from October to 6.18 million barrels per day, suggesting the country may be boosting its reserves.
"If one looks at the overall economic indicators, they are all showing a picture of China which is stagnating rather than having strong growth," said Olivier Jakob, oil analyst at Petromatrix in Zug, Switzerland.
Additional Reporting by Manolo Serapio Jr in Singapore and Adam Rose in Beijing; Editing by Christopher Johnson and Dale Hudson