China exported 250,000 tons of crude in December, up 4.2% from a year earlier.
With some analysts forecasting a drop near $10 a barrel, companies are bracing for more trouble.
The dip happened Tuesday afternoon but was only temporary, the final daily barrel price was settled at $30.44.
While demand fears are on the rise, the oil crash has mostly been fueled by a massive supply glut.
Calling the bottom of the market was now “akin to catching a falling knife” in a febrile environment, said Michael Hewson at CMC.
Investors have an eye on the release later in the day of USA commercial crude stockpiles data, which is expected to show another increase, further exacerbating a global supply glut that has hammered the market for 18 months.
“The longer it remains low, the more violent the reaction to the upside is going to be”, he said.
The uncertainty is making companies think twice before sinking money into new oil projects.
“This is a significant downward change in the fortunes of the oil and gas industry, no question about it”, said John Graves of Graves & Co., an industry consulting firm in Houston.
The oil markets are concerned that the slowdown in China’s economy, the world’s second-largest, will suppress demand even more.
But influential OPEC members led by cartel kingpin Saudi Arabia have rejected any such move, preferring to fight for market share against rival producers, particularly the United States. “Demand growth in 2016… Should easily outpace capacity growth, barring a serious macroeconomic downturn”, the bank said in a January 8 note that recommended stocks of SK Innovation and Thai Oil – the leading refineries in South Korea and Thailand, respectively. And OPEC states Iran and Iraq, whose industries have been off line for years because of conflict and sanctions, are looking to start pumping more.
While WTI crude oil was trading at $30.70 and Brent was at $30.95 during Asian trading hours, the former recently touched $29.93, a level last seen in December 2013. Hedging activity usually picks up as oil prices near big an options level, as buyers and sellers defend their interests.
Standard Chartered yesterday became the latest bank to downgrade its forecast, but it went a step further than most of its peers.
After a slow start past year, China’s auto sales picked up pace to increase by 4.7 per cent, averaging well over 2 million new private vehicles a month.
“The market has lost confidence that USA shale will decline quickly enough to perform its job this year of beginning the global rebalancing process”, Wittner said. “We’re seeing a reversal of what we saw in that first week and the dollar has been benefiting as a result” said Sireen Haraji currency strategist at Mizuho Securities in NY.
The cuts in BP’s upstream business globally will include the loss of some 600 jobs in the North Sea.