And City observers are beginning to fear that an outlier forecast from Goldman Sachs last year that crude prices may sink to $20-barrel this year could turn into reality.
A slide in Chinese shares rattled investors already concerned by near-record production and massive stockpiles of unwanted crude and refined products.
Oil prices have fallen by about 70% since mid-2014, hurting oil companies and governments that rely on crude revenue.
Over the past year, the world has been producing 1.5 million bpd more oil than it consumes.
OPEC and the International Energy Agency expect global demand growth to slow in 2016 to around 1.20-1.25 million barrels per day from a very high 1.8 million bpd in 2015.
That means that for most of 2016, the world will still be producing more than it can consume, adding to record stockpiles already exceeding three billion barrels.
Paul Stevens, professor emeritus at Dundee University and a Middle East specialist, commented: “Storage is pretty much full and people are already talking about buying tankers as floating storage.
“But if supply continues to outstrip demand, then the only thing that you can do with the oil is sell it, which inevitably pushes the price down.”
The huge storage overhang means that even if US production falls this year, as oil companies halt production, it will take several months to get rid of excess supplies.