But “rather than sparking a market rally on fears of disruption in supplies, this time around [we] could see both increase production to cause the other more economic pain”.
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The price dipped to $32.38 on Thursday, which comes after Wednesday’s dip below $35 a barrel to reach and 11-year low.
On a day when UK Brent prices fell to levels last seen in 2004, the Indian basket – composed of 73 percent sour grade Dubai and Oman crudes and the rest by Brent – closed at $29.24 per barrel, as compared to $31.33 on the previous trading day.
Crude oil futures recovered 0.47 per cent to Rs 2,366 per barrel today as speculators enlarged positions after it rebounded from a 12-year low in Asia.
“The trigger for the latest slide in oil prices has, of course, been worries about global demand, prompted by the concerns over China”, Capital Economics research house said in a note.
Over the past year, the world has been producing 1.5 million barrels per day more oil than it consumes. Beijing then suspended equities trading as the sharp falls triggered the circuit-breaking mechanism for a second time since its introduction this week.
Now an array of weak economic data from China is putting even more pressure crude.
Meanwhile U.S. gasoline stockpiles rose by 10.6 million barrels last week, the biggest build since 1993, according to Energy Information Administration data.
Brent had risen 56 cents to $34.31 a barrel as of 0150 GMT, having hit an intraday high of $34.72.
USA crude futures dropped more than 5% in early trade to just above $32 per barrel – the lowest since December 2003 – before steadying slightly.
A drop of that size usually has the power to send prices climbing, but analysts said the big decline was due to year-end “destocking” of crude inventories as companies seek out tax breaks.
The crash raises the risk of slowing demand from the world’s No. 2 oil consumer, threatening to prolong an over year-long supply overhang.
A growing rift between Saudi Arabia and Iran isn’t helping either: It reduces the odds of OPEC agreeing to cut back production.
Oil has slumped from above $115 in June 2014 as shale oil from the United States has flooded the market, while falling prices have prompted some producers to pump even harder to compensate for lower revenues and to keep market share.
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But these aren’t normal circumstances and oil prices have, instead, plunged every day so far in 2016.
