Nathan Bomey

USA TODAY

Oil prices sank to the lowest level in more than a decade Wednesday as traders grappled with a rash of worries about the global economic outlook.

Prices were driven below $34 a barrel as the energy markets coped with a rougher economic outlook in China, another day of stock-market declines and North Korea's disputed claim of having tested a hydrogen bomb.

The benchmark U.S. crude, West Texas Intermediate, fell $2 a barrel to close at $33.97, down 5.6.%, to the lowest price level since 2004, Bloomberg News reported. In Europe, Brent crude oil declined $2.19, or 6% to $34.23 a barrel.

Oil prices came under pressure as the World Bank predicted China's troubles will spill over to emerging markets, which will face the decline in commodity prices. In addition to the economic concerns and geopolitical issues, the market remains overwhelmed with a global glut of oil.

Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, has refused to slash production. And many U.S. producers have kept oil wells flowing despite the crushing financial blow of low prices.

Taken together, it's a formula for prolonged period of low prices. The only question is how low the floor goes.

"U.S. oil production will likely need to resume its decline for the market to begin to anticipate a trough in prices," U.S. Bank Wealth Management senior investment strategists Rob Haworth and Dan Heckman said in a note to investors.

More job cuts expected for oil workers in 2016

For consumers, low oil prices are welcome when they are reflected at the gas pump. They are also helping to fuel a boom in U.S. vehicle sales, which hit an all-time record in 2015 of 17.5 million, edging the previous mark set in 2000. One indicator, MasterCard SpendingPulse, suggested that holiday shopping got a boost from low fuel prices, too.

The plummeting price of petroleum has led to gasoline prices of less than $2 per gallon at most stations throughout the country, according to AAA.

GasBuddy.com analysts project that the average price of gasoline will fall for the fourth consecutive year in 2016, dropping to a full-year average of $2.28 despite an expected bump in the summer.

Though lower oil prices have boosted the pocketbook of consumers, the downturn has undermined the U.S. oil and gas business. Energy companies announced more than 258,000 layoffs globally in 2015, according to Graves & Co., which expects the job cuts to continue this year.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.



