The price of a WTI crude oil fell to as low as $29.96 per barrel. The recent tensions between Saudi Arabia and Iran only seemed to reinforce the idea that OPEC is far too much turmoil to agree on an output cut that would stabilize prices.
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Oil is particularly leveraged to the dollar and may fall between 10 to 25 percent if the currency gains 5 percent.
The CBOE Crude Oil Volatility Index, a gauge of anticipated swings in US crude prices, rose Tuesday to the highest since 2009. The fact that a lower than expected United States crude inventories figure would typically be supportive for oil prices, goes to show that for now the oil market is finding buyers hard to come by in the face of such intense selling’.
Crude futures plummeted 10 percent last week, also on fears about the global supply glut and demand weakness in China, the world’s biggest energy user. Brent crude, a benchmark for worldwide oils, gained 79 cents, or 2.6 percent, to $31.74 a barrel in London.
WTI for February delivery fell $1.28, or 4.1 percent, to $30.13 a barrel at 2:07 p.m. on the New York Mercantile Exchange.
Iraq, the second-biggest producer within the Organisation of the Petroleum Exporting Countries (OPEC), plans to export a record of around 3.63 million barrels per day from its southern oil terminals in February, trade sources said.
In part, the falling price of oil is a symptom of the same ailment that has been pulling down stock markets: China.
“There is no change in our view that global oil market conditions will demonstrate fundamental improvement over the course of 2016 amid respectable demand growth and non-OPEC production declines”.
HONG KONG- China’s crude imports surged in December, underscoring the country’s strong appetite for crude as it continues to fill its strategic petroleum reserves and as local refiners take advantage of cheap oil. “I think today’s inventory report is all about products… the long awaited massive decline in crude production is not starting again”, said Dominic Chirichella, senior partner at Energy Management Institute in NY. The Dow closed up 117.65 points, or 0.72 percent, yesterday, but the markets have fallen sharply since the beginning of the year.
Nigeria on Tuesday called for an emergency meeting of the grouping to address collapsing prices, which have now rattled world stock markets and hammered energy firms.
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Lower oil prices have had a major impact on governments across the Gulf region, with many of them announcing spending and subsidy cuts.
