On similar lines, crude oil for delivery in January was trading lower by Rs 5 or 0.24 per cent to Rs 2,084 per barrel in a business volume of 3,979 lots.
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Other oil market analysts are pointing 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.
The stock-market tumble came after the People’s Bank of China set the daily yuan reference-exchange rate against the USA dollar 0.5% lower, marking the largest adjustment toward yuan weakness since mid-August.
There’s been little positive pressure on crude oil prices apart from an escalation in tensions between historic rivals Iran and Saudi Arabia, both of which are members of the Organization of Petroleum Exporting Countries.
“We think prices could fall as low as $10/bbl before most of the money managers in the market conceded that matters had gone too far”, it added. “This is at the core of the policy dilemma China faces”.
Brent for February settlement declined $2, or 6 percent, to $31.55 a barrel on the London-based ICE Futures Europe exchange on Monday.
U.S. West Texas Intermediate (WTI) crude futures dropped $2.05 a barrel to $31.11, the lowest since December 2003.
Brent crude, the global benchmark, was off over 4% on Monday to as low as $32.30 a barrel.
Oil slumped last week as volatility in Chinese markets fueled a rout in global equities and USA stockpiles remained more than 120 MMbbl above the five-year average.
Oil market speculators have increased their net-short positions, which would profit from prices falling lower, to a record high in the week to last Tuesday, in a sign that they are losing faith in a price rise anytime soon, a weekly report from a United States government agency that tracks commodity markets activity showed on Friday.
While the chief executive of Shell Ben van Beurden made a pretty bullish call on the price of oil, by saying “the oil prices we are seeing today are not sustainable and are going to settle at higher levels”, the data says otherwise.
Meanwhile, Iranian oil is expected to return to the market after the sanction on its crude export is lifted this quarter.
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Bank of America Merrill Lynch said Friday that it expects US oil prices to average $45 a barrel this year, down from its prior forecast of $48, and Brent to average $46 a barrel, down from its earlier forecast of $50.
