Oil drops to $32 as

fears about China's

economy grow
by Ivana Kottasova @ivanakottasovaJanuary 7, 2016: 7:58 AM ET

China turmoil adds to oil concerns

Oil prices slumped to their lowest levels in more

than 10 years Thursday as another dramatic fall
on China's stock markets stoked fears of slowing
demand in the world's second biggest economy.
U.S. crude futures dropped more than 5% to just above $32 per barrel,
a level not seen in more than a decade, before steadying slightly. This
followed a drop of 6% on Wednesday. Brent crude, another global
benchmark, dropped 3% to $33.
Thursday's move came as trading in Chinese stocks was halted for the
second time this week after mainland markets fell by 7%.
Oil prices have dropped more than 65% since their peak 18 months
ago due to a global supply glut brought about by weak demand and
record inventory levels.
OPEC, led by Saudi Arabia, is engaged in a price war with higher cost
producers, including the U.S., as it tries to protect its share of the
market.
Now an array of weak economic data from China is putting even more
pressure on crude.

China is a crucial buyer in the hugely oversupplied oil market. UBS

analysts wrote recently that another demand shock from China could
send U.S. crude futures tumbling towards $25 a barrel.
CNNMoney (London)First published January 7, 2016: 4:05 AM ET