Oil prices continued their tumble on Tuesday. Fears of a slowdown in China in recent weeks have added fears of slowing consumption and massive oversupply.
While efforts to further weaken China’s currency could help shore up its export-focused economy, it would make imports of oil and other dollar-priced commodities more expensive and would be likely to further hit demand. This could lead to another round of commodity weakness and send oil even lower.
Meanwhile, a key producer – Iran – could be allowed to export the commodity within weeks as the West prepares to lift embargoes after a deal over its nuclear program. This causes concerns of an oil glut.
Brent crude, the benchmark, slipped by more than $2, ( 6 per cent), to $31.48 a barrel, a level last reached in April 2004. Meanwhile, West Texas Intermediate, the US oil benchmark, dropped $1.70 to $31.28 a barrel, a new 12-year low.
The declines in oil prices resulted in more than 10 per cent knocked off both benchmarks in the first trading week of 2016.
Source:: Oil slips below $31