Oil prices inch closer to $30 a barrel over China econ. slowdown

Oil prices at international markets have taken another tumble as concerns continue to grow about China's economic growth slowdown and persistent supply glut.

During trading around midday in London on Monday, Brent North Sea crude for delivery in February was sold at USD 32.87 a barrel, showing a decrease of about 68 cents compared to its price at Friday's closing level, AFP reported.

US benchmark West Texas Intermediate for February delivery also shed 45 cents to be sold at USD 32.71 per barrel.

The oil market plunged by ten percent last week, striking 12-year lows as a result of concerns about the economic growth in China, the world's biggest energy consumer, which overshadowed a strong US jobs report.

Market analysts have also noted that ongoing tensions between two heavyweights of the Organization of the Petroleum Exporting Countries (OPEC), Iran and Saudi Arabia, may lend some support to global oil prices and help them pick up in short term.

"Oil prices are starting the new week of trading noticeably down," said Commerzbank analyst, Carsten Fritsch, who added, "Brent and WTI have fallen to well below USD 33 per barrel and as such are once again nearing the 12-year lows they recorded last week."

Oanda analyst, Craig Erlam, for his turn, added that the market could soon breach the key psychological barrier of USD 30, beset also by the strong dollar.

The increasing strength of the US dollar makes dollar-priced crude more expensive for buyers that use weaker currencies. As a result, global oil demand dampens, further hurting oil price levels.

According to Erlam, "All fundamental factors seem to put lower for crude, be it oversupply, the slowdown in China leading to falling demand, and the stronger dollar.”

He added, "The case against crude falling below USD 30 appears pretty weak at this stage, especially when geopolitical risks are being so overlooked."

Analysts, however, maintain that simmering geopolitical risks in the oil-rich Middle East may finally help send oil prices upward as worries grow over possible disruption in supply from the oil-rich restive region.

Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services organization, EY, in Singapore, argued that prices could win support in the coming weeks from the Middle East tensions.

"Rising tensions between Saudi Arabia and Iran could support the upswing of oil prices in the short term," he said.

Gupta, however, warned that global oil markets will continue to closely track new economic data from Europe and China, and "further signs of a slowdown will put further downward pressure on the price of crude."

Saudi Arabia has been widely blamed for the plummeting oil prices as Riyadh has adamantly refused to cut its crude output in a bid to drive other oil market players, including US shale producers, out of the market.

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