That marked its first move below $30 a barrel since April 2004.
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Global markets are erring in their response to slumping oil prices by missing the upside of cheaper crude, according to US economist Barry Eichengreen. On the New York Mercantile Exchange, West Texas Intermediate futures for February were trading down 4.9 per cent at $US29.66 a barrel.
A stronger dollar makes oil more pricey for purchase in other currencies, which decreases global demand.
U.S. stocks sank on Friday, with the Dow and S&P 500 briefly falling over 3.0 percent as a global rout worsened due to falling oil prices and worries about China.
Some market commentary ascribed the downdraft in the oil patch mainly to news that China’s central bank had pumped $15bn into the country’s financial system on Friday through a medium-term lending facility, in a bid to maintain liquidity in the country’s banking system.
While oil analysts see these targets as highly ambitious and say that not all sanctions might be lifted immediately, any additional Iranian oil in the market could add to a glut that has caused a decline in prices since mid-2014.
Global crude benchmark Brent slipped below the psychologically key point to a 12-year low in the previous session after data showed stockpiles rose in top consumer the U.S. “Looking at the balance of risks and their likely timing for the year ahead, we suggest that investors sell rallies in the first quarter of 2016”. Iran is trying to regain its lost market share and doesn’t intend to pressure prices with an export increase once sanctions are removed, officials from its petroleum ministry and national oil company said this month.
WTI has outperformed Brent this week on speculation a nuclear deal between Iran and world powers may be implemented by the time markets open on Monday, triggering sanctions relief for the Islamic Republic that paves the way for a surge in oil exports. Brent crude prices have fallen by some 30% since early December 2015.
They have expected sanctions to be lifted by the end of March with around 200,000-300,000 barrels per day of extra production flowing from Iran later this year.
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Despite the low commodity prices, shale producers in the United States have kept their production rates hovering near record levels.
