Crude oil prices dive below $30 per barrel as Chinese jitters extend deeper into the start of January trading. Oil prices are at their lowest point in more than 10 years. File photo by Debbie Hill/UPI | License Photo
NEW YORK, Jan. 15 (UPI) -- Another round of weakness in the Chinese stock exchange and the imminent release of Iranian sanctions pushed crude oil prices below $30 per barrel Friday.
Crude oil prices rallied Thursday after signs of modest improvements in the European and British economies. Crude oil had held off a prolonged dip below a psychological threshold of $30 per barrel during a week of stock market slumps, but finally gave in during trading early Friday in New York.
The price for Brent crude oil, the global benchmark, dropped 3.7 percent at the start of trading in New York to $29.73 per barrel. West Texas Intermediate, the U.S. benchmark, was down 4.6 percent to $29.75 per barrel for its worst open in more than 10 years.
With inventories building, crude oil prices are pressured by a global economy awash oil. Though growth in most major economies has been steady, the pace is slow and uneven. The U.S. Federal Reserve in its Beige Book this week offered a mix review of the state of affairs. Data published Friday, however, show some underlying weakness.
"Industrial production declined 0.4 percent in December, primarily as a result of cutbacks for utilities and mining," the Federal Reserve said. "For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4 percent."
Mining and manufacturing also edged lower for December. For China, the No. 2 economy, more signs of trouble emerged Friday as the benchmark Shanghai Composite Index closed down 3.55 percent. The official Xinhua News Agency attributed the drop to a decline in bank lending.
The Shanghai opened 2016 with two days of trading shortened by an emergency trigger that kicked in when the market dropped roughly 7 percent.
Dow and S&P futures indicate a down day on Wall Street.
On the supply side, crude oil prices may be moving lower amid expectations Iran, a member of the Organization of Petroleum Exporting Countries, may be getting imminent relief from sanctions tied to its nuclear program. Atomic officials in Iran said Thursday they were pouring concrete into the reactor at the Arak nuclear facility in order to meet the terms of the multilateral deal reached last year.