Brent crude fell to another 12-year low on Thursday as the prospect of more oil supplies from Iran loomed, amid gloom over a world already awash with supply and concerns about global economic growth hitting equity markets.
The global benchmark dropped as far as $29.73, the lowest since February 2004 and down more than 1.5 per cent. It was down 26 cents at $30.05 a barrel at 0452 GMT and the contract has fallen every trading day this year.
West Texas Intermediate (WTI) was up 5 cents at $30.53 in see-saw trading.
US oil is trading at a rare premium to Brent, reflecting the hit that the global benchmark is taking with the prospect of more crude from Iran flowing as sanctions imposed on the country for its nuclear programme may be lifted as early as Friday.
It was the second time in two days for Brent, the global benchmark, to drop below $30 a barrel after WTI fell below that mark on Tuesday, before recouping some of the losses.
"Perhaps $30 or just slightly below is acting as a little bit of a floor, but that being said that's a straw in a hay barn in terms of positivity," said Ben le Brun, market analyst at OptionsXpress in Sydney.
"The rest of the news is decidedly negative about oil," he said.
Lifting of sanctions
The United Nations' nuclear watchdog is likely to confirm on Friday that Iran has curtailed its nuclear programme as agreed with world powers, paving the way for sanctions to be lifted.
Iran had also released 10 US sailors on Wednesday after holding them overnight, bringing a swift end to an incident that had rattled nerves ahead of the expected implementation of the nuclear deal.
A bearish report from the US Energy Information Administration on Tuesday underlined concerns that demand is stagnating as more supply comes to market.
Data showing that crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.
US economy woes
Concerns about the US economy also amplified the gloom and the Standard and Poor's 500 index dipped below 1,900 for the first time since early October.
In Tokyo on Thursday, the Nikkei 225 was down more than 4 per cent, after data showed core machinery orders fell 14.4 per cent in November from the previous month.