Al-Jbessa Oilfield Syria
An oil pump jack is seen pumping oil in the Al-Jbessa oilfield in Syria in AprilReuters

Crude oil prices have dropped to a five-and-a-half-year low on 12 December on concerns over a global supply glut, amid a bearish demand outlook.

Brent was trading 0.24% lower at $63.53 a barrel at 0722 GMT, after touching $63.00, the lowest since July 2009. The global benchmark traded above $115 in June.

US crude was trading 0.83% lower to $59.45 a barrel, after falling to $58.80, the weakest since July 2009. The West Texas Intermediate (WTI) has lost some 10% this week.

Mark Keenan, the head of commodities research in Asia for Societe Generale told Reuters: "The recent bout of weakness has been a function of the concerns shifting a little bit more to the demand side now.

"There has been perhaps a little bit of neglect of what the demand profile's going to be like next year."

Daniel Ang of Phillip Futures said in a note to clients: "We continue to believe that the reversal for an uptrend is not in sight."

Gulf impact

Gulf shares have taken a beating along with oil prices but economists do not expect growth in big Gulf economies to be seriously hit if oil prices continue to remain at current levels.

Capital Economics said in a 11 December note: "The slump in oil prices has caused the Gulf's equity markets to tumble, but the region's governments still seem to be unfazed. Oman aside, no country has announced cuts in public spending. And Saudi Arabia's Oil Minister has once again shrugged off calls to reduce oil output to shore up prices.

"At current oil prices, all the Gulf economies are likely to post budget deficits and the region's current account surplus will be wiped out next year. However, large FX reserves mean that, over the next few years at least, policy won't need to be tightened aggressively. Accordingly, while we expect growth to soften in 2015- 16, we don't think it will collapse."

Remarks by Saudi Arabia's oil minister Ali al-Naimi, reiterating that the kingdom will not cut output, despite prices falling to major lows, and an unexpected jump in US crude and distillate stockpiles have weighed down on oil this week.

Saudi Arabia is an Organization of the Petroleum Exporting Countries (Opec) "swing producer", which can sway the price of oil by increasing or reducing output. Saudi Arabia is the world's top oil exporter and the cartel pumps a third of the world's oil.

Oil prices have dropped 40% since June this year on oversupply concerns and fears surrounding weak demand from China, the world's second largest oil consumer after the US.