Oil Trades Below $31 as Rising U.S. Crude Stockpiles Expand Glut

Oil traded below $31 a barrel after U.S. crude stockpiles rose to the highest in more than eight decades as Saudi Arabia and Russia propose to freeze output amid a worldwide surplus.

Futures lost as much as 1.4 percent in New York, trimming the first weekly advance this month. U.S. supplies expanded to 504 million barrels, the highest level in data going back to 1930, according to the Energy Information Administration.

 Iraq said Thursday it backs any decision to support prices and balance the market without indicating whether it would cap its own output.

"The market was caught by surprise by the rise in the U.S. inventories," Jens Pedersen, a Danske Bank A/S analyst in Copenhagen, said by phone.

Crude is still down about 18 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December amid swelling U.S. stockpiles and as Iran seeks to boost exports to regain market share after sanctions were lifted.

Companies are confronting rating downgrades and oil-producing nations face bigger-than-expected withdrawals from wealth funds to cover budget deficits as energy revenues fall.

West Texas Intermediate for March delivery, which expires Monday, fell as much as 42 cents to $30.35 a barrel on the New York Mercantile Exchange and was at $30.56 at 9:38 a.m. London time.

Prices are up 3.8 percent this week. Total volume traded was about 2 percent below the 100-day average. The more-active April future was 1 cent lower at $32.92 a barrel.

Oil Extends Gain as Iran Backs Output Freeze Without Vowing Cuts

Oil extended gains above $31 a barrel as Iran supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels, without saying whether it would curb its own output.

Futures climbed as much as 3.5 percent in New York after rising 5.6 percent Wednesday. Iran backs any measures to stabilize markets including the output cap, Oil Minister Bijan Namdar Zanganeh said after talks with Qatar, Iraq and Venezuela, according to a report from the Shana news service.

U.S. crude stockpiles are forecast to have increased by 3.5 million barrels last week, according to a Bloomberg survey before government data Thursday.

Oil is still down 16 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December and as U.S. crude inventories swelled.

Zanganeh didn’t mention if Iran, the second-biggest OPEC producer before sanctions were intensified in 2012, would deviate from plans to boost exports after the lifting of penalties last month.

“The market is re-evaluating the downside risks at the moment,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone.

“There is no expectation whatsoever that Iran will curb exports. Until we see the fundamentals improve, we’re not going to get a sustainable uplift in the price.”

Saudi Oil Minister Signals More Action May Follow Output Freeze

Saudi Arabian Oil Minister Ali Al-Naimi said the output freeze agreed with Russia and two other countries on Tuesday might be followed be more action to improve the oil market.

“The reason we agreed to a potential freeze of production is simply the beginning of a process to to asses in the next few months and decide whether we need other steps to stabilize the market,” Ali Naimi said after meeting the Russian, Qatari and Venezuelan oil ministers in Doha. “We want a stable oil price.”

His comments will feed speculation that today’s meeting may be the first step on the way to an agreement among the world’s leading oil producers to curb production and revive prices. Crude has slumped to a 12 year-low earlier this month as oil-producing countries fought to defend market share, allowing global stockpiles to reach an all-time high.

The production freeze, set at January levels, is conditional on other nation’s agreeing to participate, Russia’s Energy Ministry said in a statement after the meeting ended. The deal doesn’t yet include Iran and Iraq, two OPEC members that have increased output in recent months.

According the IEA, Saudi Arabia produced 10.2 million barrels a day in January, below the most recent peak of 10.5 million barrels a day set in June 2015.

Russia produced nearly 10.9 million barrels a day in the same month, a post-Soviet record, according to official data. Venezuela pumped 2.4 million barrels a day and Qatar produced 680,000, according to the IEA.

Brent Jumps Above $35 as Saudi Arabia Meets With Russia in Qatar

Brent crude surged above $35 a barrel as energy ministers from Saudi Arabia and Russia, two of the world’s biggest oil producers, met in Doha on Tuesday to discuss the market.

Futures climbed as much as 6.5 percent in London, heading for the biggest three-day gain since August. Saudi Oil Minister Ali al-Naimi is speaking with Russia’s Alexander Novak, Qatar’s energy ministry said. Representatives from Qatar and Venezuela are also attending, the ministry said.

Venezuela has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between OPEC members and other suppliers in an attempt to reach an agreement to balance the market. Oil is still down about 5 percent this year amid the outlook for increased Iranian exports and BP Plc predicts the market will remain “tough and choppy” in the first half as it contends with a surplus of 1 million barrels a day.

Brent for April settlement advanced as much as $2.16 to $35.55 a barrel on the ICE Futures Europe exchange and was at $35.32 at 8:17 a.m. in London. The contract rose 3 cents Monday to close at $33.39 after an 11 percent gain Friday. The European benchmark crude was at a premium of $1.82 to West Texas Intermediate for April.

Oil Traders Look to Floating Storage as Onshore Tanks Fil

The world is so awash with crude, the boss of BP Plc said people will be filling their “swimming pools” with it by the end of the year.

While the company’s Chief Executive Officer Bob Dudley bemoaned this bearish outlook for oil, traders were eyeing a potentially profitable opportunity: turning supertankers into temporary floating storage facilities.

Trading houses including Vitol Group, Koch Supply & Trading LP and Glencore Plc, plus the in-house trading arms of BP and Royal Dutch Shell Plc, collectively made billions of dollars from 2008 to 2009 stockpiling crude at sea.

At the peak of the floating storage spree, sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa each hosted dozens of supertankers.

Chris Bake, a senior executive at Vitol, the world’s largest independent oil trader, gave the clearest indication yet this week that traders are considering the same strategy again.

Floating storage is profitable when the market reaches a condition traders call a “super-contango.” In a contango market, prices of oil for delivery today are lower than those in future months. Buyers with access to storage can fill up their tanks with cheap crude and sell higher-priced futures contracts to lock in a profit

Oil Snaps 4-Day Losing Streak as Crude Producers Cut Spending

Oil snapped a four-day losing streak, rebounding from the lowest close in almost three weeks as crude producers reduced spending plans.

Futures gained as much as 2.5 percent in New York after slumping 13 percent in the previous four sessions, the biggest four-day slide since November 2014. Explorer Anadarko Petroleum Corp. slashed its dividend joining a parade of drillers cutting investor payments and spending as they seek to preserve cash. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, rose to the highest since 2009 on Tuesday.

Oil is still down about 23 percent this year on speculation a global glut will persist amid the outlook for increased exports from Iran after the removal of international sanctions and brimming U.S. crude supplies. 

Stockpiles in the world’s largest consumer rose above 500 million barrels last month to the highest since 1930 and are forecast to increase for a fifth week, according to a Bloomberg survey before government data on Wednesday. Output is down about 4 percent from a June peak.

West Texas Intermediate for March delivery added as much as 71 cents to $28.65 a barrel on the New York Mercantile Exchange and was at $28.53 at 7:46 a.m. London time. The contract fell $1.75 to $27.94 on Tuesday. Total volume traded was about 2 percent above the 100-day average.

Brent for April settlement gained as much as 2.7 percent to $31.14 a barrel on the London-based ICE Futures Europe exchange. The contract lost 7.8 percent to $30.32 on Tuesday, the biggest decline since Sept. 1. The European benchmark crude traded at a 56-cent premium to WTI for April delivery.

Shell Fourth-Quarter Profit Drops 44% as Crude Prices Tumble

Royal Dutch Shell Plc, which is on the brink of completing the oil industry’s largest deal in a decade, said fourth-quarter profit fell 44 percent after the rout in crude prices deepened.

Profit adjusted for one-time items and inventory changes shrank to $1.8 billion, near the midpoint of the preliminary $1.6 billion-to-$1.9 billion range it gave last month, Shell said Thursday.

That matches the $1.8 billion average estimate of 14 analysts surveyed by Bloomberg, and compares with profit of $3.3 billion a year earlier.

Crude’s collapse has slashed earnings for oil companies from Exxon Mobil Corp. to BP Plc, leaving them struggling to strike a balance between investing for growth and making shareholder payouts.

The Hague-based Shell is betting its $50 billion acquisition of BG Group Plc will help it maintain dividends and increase oil and gas production at a time when cash flow is shrinking.

“BG now becomes important for Shell because it helps them grow and high-grade their assets,” Brendan Warn, a London-based analyst at BMO Capital Markets, said by phone. “It gives Shell the opportunity to divest their high-cost assets and focus on BG’s high-margin projects.”

Oil Prices Could Jump 50% by the End of 2016

Oil bulls distressed that last week’s rally fizzled can find some comfort in forecasts for a bigger and longer rebound by the end of the year.

Analysts are projecting prices will climb more than $15 by the end of 2016. New York crude will reach $46 a barrel during the fourth quarter, while Brent in London will trade at $48 in the same period, the median of 17 estimates compiled by Bloomberg this year show. 

A global surplus that fueled oil’s decline to a 12-year low will shift to deficit as U.S. shale output falls, according to Goldman Sachs Group Inc.

U.S. production will drop by 620,000 barrels a day, or about 7 percent, from the first quarter to the fourth, according to the Energy Information Administration. Meanwhile, the International Energy Agency forecasts total non-OPEC supply will fall by 600,000 barrels a day this year. 

That may pave the way for a rebound as lower prices have stimulated global demand. Oil is the “trade of the year,” according to Citigroup Inc., which is among banks from UBS Group AG to Societe Generale SA that predict a gain in the second half.

West Texas Intermediate and Brent both closed at the lowest level since 2003 on Jan. 20. WTI for March delivery ended the session at $29.88 a barrel on Tuesday and would need to gain 54 percent to reach the median estimate of $46 a barrel. 

The London contract for April delivery settled at $32.72 and needs a 47 percent boost to hit $48. The median price was taken from estimates provided this year by 17 analysts who gave forecasts for both oil grades.

Europe Stocks Fall Amid Earnings With Oil Near $30; Ruble Gains

Stocks fell in Europe and Asia as earnings from Swatch Group AG to Nomura Holdings Inc. missed estimates and investors weighed the outlook for oil prices after a slide below $30 a barrel.

Europe’s benchmark equity gauge slumped for a third day, while Japan’s Topix index sank the most in two weeks on a 10 percent plunge in Nomura. U.S. stock-index futures were little changed. Oil steadied after its biggest two-day drop in almost seven years, buoying Russia’s ruble.

U.S. crude’s 43 percent retreat over the past year has weighed on growth in oil-rich emerging economies, fueled speculation of defaults by commodity producers and battered earnings at corporate giants from BP Plc to Exxon Mobil Corp. 

Nomura postponed a target for making its overseas operations profitable and Swatch Group said sales declined for the first time in six years, adding to signs that business conditions are deteriorating beyond the commodities sector.

The Stoxx Europe 600 Index dropped 0.7 percent at 8:19 a.m. in London, while the MSCI Asia Pacific Index retreated 2.3 percent. Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent.

Swatch Group slumped 3.6 percent after the maker of Tissot and Omega timepieces reported 2015 earnings that missed analyst projections. 

Novo Nordisk A/S, the world’s largest maker of insulin, dropped 4.9 percent as fourth-quarter profit trailed estimates. Nomura, Kobe Steel Ltd., Casio Computer Co. and IHI Corp. all tumbled more than 10 percent in Tokyo trading after their results disappointed investors.

Morgan Stanley: This Is What a World Without Oil Looks Like

A new note from Morgan Stanley analysts led by Chief Cross-Asset Strategist Andrew Sheets demonstrates the degree to which the fortunes of the energy sector are currently driving stocks and bonds, but emphasizes the correlation is overdone.

Stripping out the impact of the energy sector reveals a far different picture for industrial production, corporate earnings, and inflation around the world.

"Oil’s role in driving hour-by-hour market moves is overstated. But its place in the broader macro debate remains central," write the analysts. 

"Energy companies are no longer leading equity or credit indices higher or lower. In our view, oil and markets are moving together because they are driven by similar things: concerns over growth, a lack of risk appetite, [and] a relentlessly strong trade-weighted dollar."

U.S. industrial production has slipped in recent months, with some economists interpreting the decline as a sign of impending recession. Removing the effect of energy, however, and the fall in industrial production disappears faster than an East Texas jackrabbit.

"Lower oil prices have clearly not been the economic boon many had previously assumed," notes Morgan Stanley. "But it is also important to recognize that many 'broad' measures of economic health, such as U.S. industrial production, can be significantly affected by weakness in oil."

BP Profit Falls 91%, Missing Estimates, as Oil Slump Deepens

BP Plc reported a 91 percent decline in fourth-quarter earnings after average crude oil prices dropped to the lowest in more than a decade.

Profit adjusted for one-time items and inventory changes totaled $196 million, the London-based company said Tuesday in a statement. That missed the $814.7 million average estimate of 10 analysts surveyed by Bloomberg, and compares with year-earlier profit of $2.24 billion.

Crude’s collapse has driven BP’s market value below $100 billion for the first time since the Gulf of Mexico oil spill in 2010. Chief Executive Officer Bob Dudley has cut billions of dollars of spending, removed thousands of jobs and deferred projects in an attempt to protect the balance sheet. 

Dudley was one of the first of his peers to start preparing for a prolonged slump and that puts BP in a better position, according to Barclays Plc.

Profit has been lower year-on-year for six consecutive quarters as oil prices tumbled. The average price of benchmark Brent crude slumped 42 percent in the fourth quarter from a year earlier to $44.69 a barrel, the lowest since 2004.

PetroChina Co. said last week it expects 2015 profit to fall at least 60 percent. Chevron Corp. on Friday reported its first quarterly loss since 2002, while Royal Dutch Shell Plc said last month that fourth-quarter profit is likely to drop at least 42 percent. The European oil major is scheduled to report full earnings on Thursday.

BP started cutting costs and selling assets following the 2010 oil spill. In October, it lowered its 2015 capital-spending forecast to about $19 billion after investing about $23 billion in 2014. The company said then it expects to spend $17 billion to $19 billion a year through 2017.

BP’s shares have increased 3.7 percent this year following last year’s 14 percent decline, a second straight year of losses. It’s the best performer on the eight-member FTSE 350 Oil & Gas Producers Index after BG Group Plc.

Oil tumbles as profit-taking kicks in ahead of stocks data

Crude oil futures declined on Wednesday, heading back towards $30 a barrel as profit-taking wiped out a chunk of the gains notched up in the previous session on hopes for output cuts.

Prices were also dampened by a bigger-than-expected build in U.S. crude inventory and worries about the economy in China, the world's second-largest oil consumer.

Brent crude LCOc1 had declined 60 cents to $31.20 a barrel by 0723 GMT, after hitting a session low of $31.05 a barrel. It settled up $1.30 at $31.80 on Tuesday.

U.S. crude CLc1 fell 75 cents to $30.70 a barrel, recovering slightly from a session low of $30.30 a barrel. It ended Tuesday $1.11 higher at $31.45 a barrel.

"The positive sentiment stemmed from strong U.S. corporate earnings and talk of OPEC and Russia considering production cuts. We consider the likelihood of any agreement between these parties as extremely low," ANZ stated in a note on Wednesday.

Daniel Ang at Phillip Futures said: "With the U.S. ability to produce oil in much higher quantities, it will be difficult to support prices with supply cuts.

Therefore, it is probably the case that even if major producers want higher prices, they may not be able to achieve this without everyone's blessing."

"Inventory figures, if continuing to grow, would remind the market of the current oversupply. This would possibly be a bad sign for oil prices."

Crude extends gains after surge on short-covering, cold spell

Crude oil futures extended gains on Monday following a surge at the end of last week on short-covering and fuel demand triggered by freezing weather in parts of the northern hemisphere.

Oil prices soared 10 percent on Friday, one of the biggest daily rallies ever, as bearish traders who had taken out record short positions scrambled to close them, betting the market's long rout may finally be over.

Brent had gained 39 cents or 1.21 percent to $32.57 a barrel by 0519 GMT, after touching $32.69 a barrel earlier in the day. It settled at $32.18 a barrel in the previous session.

U.S. crude rose 30 cents or 0.93 percent to $32.49 a barrel, compared with its session-high of $32.64 and previous settlement at $32.19.

"A change in investor sentiment was the key factor, with speculative short positions in WTI falling from historically high levels the previous week," ANZ said in a note on Monday, referring to U.S. West Texas Intermediate crude.

"Low crude oil prices continue to negatively impact high cost U.S. oil producers. Indeed, recent Baker Hughes data suggested U.S. oil explorers idled more oil rigs this week."

Morgan Stanley said that a weaker U.S. dollar rather than fundamental factors were supporting oil futures denominated in the greenback.

Asia stocks lows, helped by ECB, oil bounce

The euro slipped 0.4 percent to $1.0832 EUR=. The common currency fell to an eight-month low of $1.0523 in December but has appreciated significantly because the ECB's easing decision that month fell far short of expectations.

The dollar was up 0.3 percent at 118.03 yen JPY=, pulling away from a one-year trough of 115.97 struck earlier this week against the safe-haven Japanese currency.

The Chinese yuan remained relatively steady against the dollar as efforts by local authorities to quell speculation of a sharp depreciation appeared to work for now.

Onshore spot yuan CNY=CFXS stood little changed at 6.5794 to the dollar, corralled in a narrow 6.5837-6.5768 band so far this week.

After guiding the yuan sharply lower and pushing onshore spot rates to a five-year low earlier this month, the People's Bank of China (PBOC) has helped the currency steady by setting a succession of midpoints within a tight range.

Authorities have also introduced steps to discourage speculators from shorting the yuan.

U.S. crude oil CLc1 extended an overnight rally made after data showed stockpiles at some U.S. sites did not grow as much as forecast, providing participants in the battered market with an incentive to cover short positions.

The contracts were up 1.2 percent at $30.71 a barrel. U.S. crude fell to its lowest levels since 2003 earlier this week as the prospect of Iranian oil - following the lifting of international sanctions on Tehran - flooding a heavily saturated market dragged down prices.

Oil slump rocks markets again in equity rout

World stocks sank to their lowest levels since 2013 on Wednesday, hit by another tumble in oil to 13-year lows that kept global equities set for one of their worst monthly performances ever.

The MSCI World equity index fell 1.3 percent to its lowest level since July 2013, and the index's fall so far in January is already 9.9 percent, the biggest drop since 2009.

There have been steeper monthly drops only six times in the index's 28-year history, three of which occurred during the financial crisis of 2008/2009

"I am quite pessimistic about the equity markets for the next two to three months. I do not see a 2008-style scenario, but I do see a bear market coming," said Andreas Clenow, hedge fund trader and principal at ACIES Asset Management, suggesting a further 10 percent fall to come.

U.S. crude wallowed at its lowest since 2003 after the world's energy watchdog warned the market could "drown in oversupply". U.S. futures shed 2.9 percent to $27.63 while Brent crude lost 2.1 percent, having slipped below $28 earlier in the session.

European shares touched their lowest level since October 2014, following losses in U.S and Asian stock markets as the relentless slump in oil prices continued to drag on risk assets.
The FTSEurofirst 300 fell 2.8 percent, set for its biggest single session loss of an already turbulent 2016.

Germany's DAX, France's CAC and Britain's FTSE were all down around 3 percent and also set for their biggest fall of the year so far.

Oil shares in Europe are down 13 percent already this year, also at their lowest levels since 2003. That has been a major weight on the FTSEurofirst 300, which is down around 10 percent in 2016, which investors see as "correction" territory.

U.S. stock futures were down 1.8 percent on Wednesday ahead of the open, after Wall Street had seen its early gains on Tuesday erased by the tumble in U.S. crude.

Oil slides to lowest since 2003 as Iran sanctions lifted

Oil prices hit their lowest since 2003 on Monday, as the market braced for a jump in Iranian exports after the lifting of sanctions against the country over the weekend.

The U.N. nuclear watchdog on Saturday said Tehran had met its commitments to curtail its nuclear programme, and the United States immediately revoked sanctions that had slashed Iran's oil exports by around 2 million barrels per day (bpd) since its pre-sanctions 2011 peak to little more than 1 million bpd.

On Sunday, Iran - a member of the Organization of the Petroleum Exporting Countries (OPEC) - said it was ready to increase its exports by 500,000 bpd.

Worries about Iran's return to an already glutted oil market drove down Brent to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was at $28.55 by 0523 GMT, still down over 1 percent from its settlement on Friday.

U.S. crude was down 38 cents at $29.04 a barrel, not far from a 2003-low of $28.36 hit earlier in the session.

However, traders and analysts described the plunge in prices as a kneejerk reaction, saying Iran's ambitions to export 500,000 bpd were not very realistic.

Analysts expect Iran to take time to fully revive its export infrastructure that has suffered from years of underinvestment.

But the OPEC member does have at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market, and traders are betting that oil prices will drop some more.

Oil Stock Market News - Crude Oil Fell In Asian

Brent falls to another 12-year low on oversupply gloom

Crude oil fell in Asian trade on Thursday, with Brent marking another 12-year low amid gloom over a world awash with supply and concerns about global economic growth hitting equity markets.

Brent LCOc1 dropped as far as $29.73, the lowest since February 2004 and down more than 1.5 percent. It was down 47 cents at $29.84 a barrel at 0145 GMT and the contract has fallen every trading this year.

West Texas Intermediate (WTI) CLc1 erased earlier gains and was down 12 cents at $30.36 a barrel. It settled at $30.48 on Wednesday, up 4 cents, the contract's first gain in 2016.

A bearish report from the U.S. Energy Information Administration on Tuesday underlined concerns that demand is stagnating as more supply comes to market.

Data showing that crude inventories USOILC=ECI rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline USOILG=ECI and over 6 million in distillates, which includes diesel and heating oil USOILD=ECI. <EIA/S>

In Tokyo on Thursday, the Nikkei 225 .N225 was down nearly 4 percent, after data showed core machinery orders fell 14.4 percent in November from the previous month.

Oil's slide below $30 sends shockwaves far and wide

U.S. oil stumbled below $30 for the first time in 12 years to levels that threaten the survival of many U.S. shale firms, spur more belt-tightening by oil majors and spell more pain for crude-producing nations and regions.

A seven-day losing streak fueled by concerns about a continued supply glut and fragile demand from China, the world's No. 2 consumer, wiped out almost a fifth of crude prices CLc1 this year and 70 percent since mid-2014.

Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10.

And more of the world's biggest energy companies are conceding that it may be many years before prices recover. On Tuesday, U.S. crude futures traded below $50 through 2021.

British oil and gas giant BP Plc (BP.L) said on Tuesday it would slash 5 percent of its workforce in the face of the continued slump while Brazil's state oil firm Petrobras (PETR4.SA) cut its investment plan for the third time in six months.

Royal Dutch Shell Plc (RDSa.L) and Exxon Mobil Corp (XOM.N) meanwhile have seen their stock decline by 11 and 4 percent respectively.

The latest cuts add to the hundreds of thousands of job lost and billions of dollars spending cuts throughout crude's 18-month slide from levels above $100 a barrel in the summer of 2014, a collapse that has run far longer and deeper than originally expected, reaching crisis point for some. 

There are few signs suggesting any near-term relief. The U.S. Energy Information Administration predicted on Tuesday that already heavily swollen global oil stockpiles would continue rising until the second half of next year.

Oil prices tumble 3 percent to just over $30; traders bet on more falls

Crude oil fell 3 percent on Tuesday, heading toward $30 per barrel and levels not seen in over a decade, with analysts scrambling to cut their price forecasts and traders betting on further declines.

Prices are down around 20 percent since the start of the year, dragged lower by soaring oversupply, China's weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for countries using other currencies to buy oil.

International benchmark Brent crude futures LCOc1 dropped over 3 percent to a low of $30.43 per barrel on Tuesday, a level last seen in April 2004, before edging back to $30.69 by 0744 GMT (2.44 a.m. ET) , still down 86 cents from their last settlement.

U.S. crude West Texas Intermediate (WTI) CLc1 fell to a low of $30.41 per barrel, a level last seen in December 2003, before crawling back to $30.59 per barrel.

Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, implying that many traders expect further falls. 

Traders and analysts said ballooning oversupply and China's slowing economy were the main reasons for the oil price rout, which has pulled prices down by over 70 percent since mid-2014. They have also started to point at the dollar as a drag for crude.

Oil prices fall for sixth session as recovery hopes wane

Oil prices fell for a sixth session to trade at almost 12-year lows on Monday as slowing growth in China rattled investors' hopes for demand this year and traders increased bets against any near-term recovery.

Brent crude futures LCOc1 were down by 47 cents at $33.08 a barrel by 4.35 a.m. ET, off 15 percent in a week, while U.S. West Texas Intermediate (WTI) crude CLc1 was down 52 cents at $32.64 per barrel.

Speculators increased their net-short positions to a record high in the week to last Tuesday, in a sign that they are losing faith in a price rise anytime soon.

Analysts pointed to China's slowdown, which saw a slide in the yuan and two emergency suspensions in stock trading markets last week, as the main reasons for lower oil and commodity prices.

On Monday, turbulence gripped Chinese markets once again, as blue-chip stocks fell by another 5 percent and overnight interest rates for the yuan outside of China soared to nearly 40 percent, their highest since the launch of the offshore market.

Morgan Stanley said on Monday that oil prices in the $20s were possible, especially if the dollar surges more against other currencies. "A 15 percent CNY (Chinese yuan) depreciation alone could send oil into the $20s," the bank said.

Monday's decline adds to last week's more than 10 percent drop in both Brent and WTI prices.
Goldman Sachs analysts, who have also said oil could hit $20 a barrel, said in a note on Friday that sustained lower prices were needed in the first quarter "so producers will move budgets down to reflect $40 a barrel oil for 2016".

Oil prices have fallen over 70 percent since the downturn began in mid-2014 as soaring global production sees hundreds of thousands of barrels of crude produced every day without a buyer.