World Stock Markets Track Oil Price Movement

Stock markets remain in the grip of oil price turmoil amid fading hopes of new economic stimulus.

Renewed worries about the record glut in oil hammered US energy (NasdaqCM: USEG - news) stocks in late trade on Monday, with the S&P 500 falling 1.6% - its energy sector losing 4.5% of its value.

Financial shares also took a hit as investors fretted over the industry's loan exposure to energy.

It (Other OTC: ITGL - news) proved a catalyst for trading in Asia on Tuesday - with Japan's Nikkei closing 2.4% lower as investors feared the Bank of Japan taking no action at its policy meeting this week.

Stock markets in China were also back in 'risk-off' mode, with the Shanghai Composite closing down 6.4% in late trading to a 14-month low.

Analysts there told the AFP news agency that shareholders were "panic selling" in late trading - a session which would have been suspended under old 'circuit breaker' rules that were later abandoned for exacerbating stock sales.

Europe's main stock markets followed the pack - with the FTSE 100 down 1.6% or 96 points lower at 5780 in early trading as Brent crude traded below $30.

It later recovered those losses after oil costs bounced back.

The state of the global economy is a concern for investors at a time when core commodity prices are reflecting weak demand - especially in major emerging markets such as China.

The latest oil price movements followed comments by the head of the OPEC cartel of oil-producing nations, who blamed smaller producers for the glut in supply.

Abdalla el Badri pointed to an "overhang" - or extra supply of oil supply in world markets - of 260 million barrels at the end of last year, with the majority of it created by non-OPEC members.

Many countries have been pumping oil at record levels to maximise revenues in the low price environment.

Mr el Badri said it was crucial that all major producers sit down to come up with a solution to the price slump - which last week saw Brent crude fall to below $28, its lowest level since November 2003.

It had peaked at above $115 in the summer of 2014.

But markets instead appeared to view the speech as a hardening of Opec's rhetoric against outsiders such as Russia and America's shale oil industry.

Brent crude was trading at $29.50 early on Tuesday before rising to almost $31.

The oil price collapse has been mirrored on stock markets this year - with concern growing that the state of the world economy will fail to boost demand for oil and raise prices at a time when producers are refusing to cut output.

There is no sign of any deal to slash production - with OPEC making it clear last year it was more interested in reclaiming market share from the US shale industry than tackling weak prices (Other OTC: UBGXF - news) .