Oil prices dropped below $32 a barrel Monday for the first time in 12 years as a persistent global glut of crude continues to weigh on the market.
Oil prices have plunged since mid-2014 and are down more than 10% already this year. The energy rout has roiled global markets, as energy-producing companies and countries have struggled to cut costs amid lower revenues. Energy stocks slumped Monday, helping drag down broader indices.
Drivers are enjoying the cheapest gasoline prices in years, with the U.S. prices at the pump averaging $1.965 a gallon Monday.
Oil production outpaces demand globally, even though producers have already cut billions in spending and sharply reduced new drilling. Ongoing turmoil in Chinese markets has also fueled concerns about an economic slowdown in China, the No. 2 oil consumer.
Wall Street analysts are adjusting their oil-price forecasts lower, catching up with a market that has traded lower every day this year. Forecasters now say prices below $30 a barrel are increasingly likely as global inventories continue to grow and the dollar strengthens, pressuring dollar-priced commodities like oil.
Light, sweet crude for February delivery recently fell $1.96, or 5.9%, to $31.20 a barrel on the New York Mercantile Exchange, on track for the lowest settlement since December 2003.
Brent, the global benchmark, fell $2.07, or 6.2%, to $31.48 a barrel on ICE Futures Europe, on track to close at the lowest level since April 2004.
The global crude market is expected to become more oversupplied as soon as this month if sanctions are lifted on Iran, allowing the country to increase its oil exports.
U.S. stockpiles of crude oil are near the eight-decade high reached in April, according to Energy Information Administration data, and inventories typically rise in late January and February as refiners buy less crude while performing seasonal maintenance. Some analysts have warned that crude inventories could exceed available storage space, forcing buyers to store oil on ships or stop buying altogether, sending prices even lower.