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Crude Falls Below $30 a Barrel for the First Time in 12 Years

12 January 2016 21:48 (UTC +04:00)

Baku-APA. Oil dropped below $30 a barrel in New York for the first time in 12 years on concern that turmoil in China’s markets will curb fuel demand, APA reports quoting Bloomberg.

West Texas Intermediate crude tumbled to the lowest since December 2003. Concerns that China’s economic growth may slow has soured investors on the prospects for a quick recovery, turning hedge funds the least bullish in five years. A rapid appreciation of the U.S. dollar may send Brent oil to as low as $20 a barrel, Morgan Stanley said.

Oil extended a 70 percent drop since June 2014 as volatility in Chinese markets fueled a rout in global equities and U.S. stockpiles remained more than 120 million barrels above the five-year average. Saudi Arabian Oil Co., the world’s biggest crude exporter, confirmed on Jan. 8 it was studying options for a share sale, including listing “a bundle” of refining subsidiaries.

"Psychology has completely taken over," said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. "Market sentiment has shifted so far that it’s self-fulfilling. There’s been a big cutback in CFTC positions, which shows that everyone is heading for the exits."

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. The contract touched $29.93, the lowest intraday price since December, 2003. Prices lost 30 percent last year.

Brent for February settlement decreased $1.05, or 3.3 percent, to $30.50 a barrel on the London-based ICE Futures Europe exchange. It touched $30.34, the least since April 2004. The European benchmark crude traded at a 37 cent premium to WTI.