Oil edged down today as bearish sentiment driven by oversupply rattled the market and was set to lead prices to a third straight weekly drop, the longest losing streak in four months.

Global benchmark Brent crude traded one cent lower at $37.05 a barrel shortly before 3pm.

US crude futures fell to a near seven-year low of $34.41 a barrel but later recovered to $34.93, down two cents on Thursday's close.

The global supply glut that brought prices close to 11-year lows this week means Brent will post losses for a third consecutive year, the first time that has happened since exchange-based oil trading started in the 1980s.

West Texas Intermediate (WTI) futures are set for a second straight yearly loss, the first time that will have happened for the US oil pricing benchmark since 1998.

"Prices are falling on continued bearish sentiment and maybe WTI has fallen on the conviction that it was priced too high against Brent," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

The WTI-Brent spread fell to the lowest in 11 months earlier this week at $1.10 a barrel. The differential has since recovered to $2.10 as WTI made bigger losses.

Traders were preparing for even lower crude prices next year by taking up more put options to sell US crude in February should prices fall to $30, $25 or even $20 per barrel, according to Reuters data.

Prominent oil trader Pierre Andurand said prices could fall below $25 a barrel in the first quarter of 2016.

"Recent developments on the supply side continue to point toward inventory builds that will put pressure on oil prices to bring them further down to below $30/bbl (barrel) and possibly at/below $25/bbl in the first quarter of 2016," Mr Andurand wrote in a letter reviewing the Andurand Capital Management fund's performance through November, seen by Reuters.

Russia, one of the world's top oil producers, said on Friday it was not considering coordinating its output policy with OPEC members, adding the organisation was not exerting as much influence as it did in the 1970s and 1980s.

Russia has long maintained informal contacts with OPEC and hinted in the past it might be ready to cut oil production to prop up prices.

The seemingly unstoppable decline in oil is raising concerns about investment in future supplies, IEA Executive Director Fatih Birol said on Friday in Singapore.

"The current low oil price makes me worried because it means lower investments in new oil projects," he said.

"This year, oil investments declined more than 20 percent and more importantly we expect it will decline next year as well," Birol said.

"We have never seen in the last 30 years oil investments decline two years in a row in the world."