Oil price hits 12-year low

In London, European benchmark Brent North Sea crude oil for February fell 48 cents (1.4 per cent) to $33.75 a barrel.

“We continue to expect the price of Brent crude oil, now trading around $33 per barrel, to recover to $60 in 2017 and $70 by 2020”.

Oil prices plunged to 12-year lows on Thursday after China allowed its yuan currency to slip, sending stock markets tumbling globally.

Goldman, which has said oil could hit $20, said in a note on Friday the market needs to see sustained low prices through the first quarter “so producers will move budgets down to reflect $40 a barrel oil for 2016”.

The government data also showed a gain in U.S. crude production of 17,000 barrels a day, taking it to 9.22 million barrels a day, the fourth consecutive week of increases.

An analysts from Nomura Holdings Inc.to UBS Group AG forecast crude may fall to nearly $30 while the Organization of Petroleum Exporting Countries has efficiently abandoned output limits amid a global glut to secure market share. Trading on the CSI 300 Index was suspended after it plunged more than 7 percent.

This followed a drop of 6% on Wednesday.

The trading on the stock exchanges in China was stopped for the second time this week after the stock market fell more than 7%.

United States benchmark West Texas Intermediate for February shed 58 cents to stand at $33.39.

“Oil futures saw some demand today as there was a slight improvement in market sentiment after China’s central bank fixed the yuan mid-point more or less the same from the previous day”, said IG Markets analyst Bernard Aw.

In its December meeting in Vienna, OPEC left its production strategy unchanged – meaning that OPEC is still not putting any breaks on its production levels, effectively keeping oil prices at lower levels in the wake of the current global oversupply of crude oil. As per the EIA (U.S. Energy Information Administration), in November 2015, supply exceeded demand by 1.3 MMbpd (million barrels per day). The International Monetary Fund estimates Venezuela’s gross domestic product contracted 10% past year.

Market participants in general are remaining very jittery, with the concerns over China, increased geo-political tensions elsewhere, depressed commodity markets and anxiety over the general pace of growth in the global economy encouraging investors to scatter away from riskier assets.