Crude prices on world markets

The benchmark US crude, called West Texas Intermediate, fell 3.5% to $32.81 a barrel in morning trading, and Brent crude, the global benchmark, slipped 2.5% $33.36.

“With oil markets producing 1 million barrels a day in excess (of demand) and very little sign of any rational response from the supply side, it’s little wonder we’re seeing pressure again”, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

Saudi Arabia the biggest producer in the Organisation of Petroleum Exporting Countries is competing for market share amid a global supply glut that cut prices 35 percent past year. The front-runner contract closed above $37 a barrel before the new year, but has been declining in every trading day of 2016.

Concerns about the economy in China, the world’s second-largest oil consumer, were worsened by news that national rail freight volumes logged their biggest ever annual decline in 2015.

Oil prices have slid more than four per cent to new 11-year lows as the row between Saudi Arabia and Iran made any co-operation between major exporters to cut output even more unlikely. USA oil inventories probably increased by 500,000 barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. The price of both types of oil is now the lowest since 2002.

Tim Evans of Citi Futures said the selloff came after “a sharp seven percent drop in Chinese equities triggered a much wider risk-off trade flow, with investors around the world increasingly anxious”.

At 1030 GMT, European benchmark Brent North Sea crude oil for February delivery sank to $34.83 per barrel – the lowest since July 1, 2004 – before ducking back above $35.

Oil prices tumbled to $32.62 a barrel on Thursday as a result of rising United States energy stockpiles and China’s weakening currency. “At this point, the increased tensions between the regional powers of Saudi Arabia and Iran has limited direct impact on the oil market supply and demand fundamentals, unless the developing events cause the Iran nuclear deal to break up, although this is not expected”.

After the recession ended, oil prices recovered as global demand perked up.

The U.S. government also announced data on Wednesday that showed a rise in gasoline stocks by 10.6 million barrels, more than expectations of analysts.