US crude oil dives below $40 a barrel in opening trade

“There is no end in sight to the nose-dive that oil prices have been experiencing”, Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report. A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand.

Monday’s close was the first time oil has settled below $40 per barrel since 2009, though crude briefly traded below that mark Friday before settling higher. Its worth has fallen for eight straight weeks, the longest stoop in virtually 30 years. Panic across the markets about a major slowdown in China pushed the oil price lower amid fears of a slowdown in consumption. The 19-commodity Thomson Reuters/Core Commodity CRB Index.TRJCRB dropped almost 2.7 percent to its lowest since late 2002.

“The petroleum markets are extending final week’s decline together with global fairness markets on Monday as worries over slowing Chinese financial progress intensified”, stated Tim Evans, power markets strategist at Ciri Futures.

Iran’s Oil Minister Bijan Zanganeh said on Sunday that holding an emergency Opec meeting may be “effective” in stabilising the oil prices, Iran’s oil ministry news agency Shana reported. The nearest support for crude oil prices is seen at $38 per barrel. Bullion for immediate delivery fell a relatively modest 0.4 per cent to US$1,155.75 an ounce in London trade.

Chinese stock markets suffered their biggest one-day drop since the financial crisis, stirring huge sell-offs in global equities and commodities, with more than 400 billion euros ($465 billion) wiped off Europe’s FTSEurofirst 300 share index.

In the U.S., rigs drilling for oil climbed by 2 to 674 through August. 21, according to Baker Hughes, an oilfield-services company.

Iran was OPEC’s second-largest producer before global penalties over its nuclear program began in mid-2012. Cutting oil production will eventually help oil prices rebound in the next couple years or so, he said, but the outlook is “opaque or threatening” for the next six months at least.

Daniel Ang at Phillip Futures said: “Considering how prices have been moving, we do not have much hope for prices to stay afloat”. At the same time, crude production from Iraq and Saudi Arabia increased in July, Hittle said.

Fourteen of the 20 most-active U.S. crude oil options were out-of-the-money puts, giving the buyer the right but not the obligation to sell oil at that price, with the $35 strike price popular for both October and December expiry. That’s the highest level since May 1.