Oil fell below $30 a barrel on Tuesday to its lowest since 2016 as the coronavirus pandemic hits economic growth and oil demand while Saudi Arabia and Russia battle for market share.
Countries including the United States and Canada, along with nations in Europe and Asia, are taking unprecedented steps to contain the virus, curbing demand for crude and products such as gasoline and jet fuel.
Brent crude slipped 1.5% to $29.57 a barrel at 1316 GMT, having earlier touched $29.44, the lowest since January 2016. U.S. West Texas Intermediate (WTI) crude rose 0.7% to $28.91.
"Unfortunately for the bulls, we believe we have not seen the worst of the price rout yet," said Bjornar Tonhaguen of Rystad Energy."
"The market will soon come to realize that the it may be facing one of the largest supply surpluses in modern oil market history in April."
U.S. President Donald Trump warned on Monday that the United States may be heading into recession as economic activity across the globe slowed and stock markets tumbled.
The United States has said it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR). Other countries and companies are planning similar measures to fill storage tanks.
Attention will focus later on U.S. inventory reports that are expected to show crude inventories rising for an eighth straight week.
The American Petroleum Institute releases its supply report at 2030 GMT and government inventory data is due to be published on Wednesday. [EIA/S]
Despite the loss of oil demand because of the global spread of the virus, Saudi Arabia and Russia are embroiled in a price war instigated after failing to agree to extend supply curbs to support the market.
The Saudi energy ministry said on Tuesday that the kingdom's crude exports are set to rise during coming few months to exceed 10 million barrels per day, as it plans to use more gas for power rather than burning crude.
"There is still every sign of a price war on the oil market," said Commerzbank analyst Carsten Fritsch.
"If the announced production increases are actually implemented, the price risks plunging further towards the $20 mark."