Worldwide benchmark Brent crude futures fell over 3 percent to a low of $30.43 per barrel on Tuesday, a level last seen in April 2004, before edging back to $30.64 by 0714 GMT, still down 91 cents from their last settlement.
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But he added that oil markets would be closely tracking new economic data from Europe and China, and “further signs of a slowdown will put further downward pressure on the price of crude”.
“At the moment not many people are expecting to see a significant rebound in oil, so prices are continuing to gush lower to multi-year lows as sentiment goes from bad to worse”, Gain Capital analyst Fawad Razaqzada said.
Oil prices dropped again Monday, extending 2016’s unbroken losing streak and worsening a bust in Houston’s key industry that is shaping up as the most severe in nearly half a century.
In industry news, Nigeria’s oil minister said a “couple” of OPEC members had requested an emergency meeting, adding that current market conditions support the need to hold such a gathering.
PFGBest senior oil analyst Phil Flynn understands the worries, but feels the crude oil market fundamentals don’t support a market crash. The contract touched $31.61, the lowest intraday price since December 2003.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 7.1 points, or 0.14 per cent, to 4925.1, while the broader All Ordinaries index had lost 8.5 points, or 0.17 per cent, to 4982.2.
Although temperatures are heading lower, Energy Aspects said supply will have to fall further to rebalance the market.
Oil prices have plunged since mid-2014 and are down more than 10% already this year.
Meanwhile, Brent has fallen almost 20 percent in January and is down 2% at US$33.34 a barrel at the time of writing. Whilst this has contributed to further geopolitical uncertainties, it is unlikely that it will have a sustained impact on oil prices.
News also circulated overnight that Saudi Arabia is considering floating part of its state-owned oil producer, Aramco, a company worth as much as $10 trillion.
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Combined Brent and WTI short positions had been reduced by less than five per cent from the record 364 million barrels set three weeks earlier which leaves most of the short positions still be covered. Bank of America Corp. cut its average 2016 Brent forecast to $46 a barrel from $50.
