Oil prices declined further on 18 August amid expectations of weaker demand from Asia, while oil-rich nations remain adamant about keeping their production goals.
Brent crude is trading down 0.27% at $48.61 per barrel as at 5.48 am GMT, while West Texas Intermediate (WTI) crude fell 0.14% at $41.81. On 17 August, the WTI benchmark fell below $42, its lowest price in six years.
There are indications that traders have taken huge bets on further fall in oil prices. They have been aggressively buying put options, which would enable them to sell an oil contract at a profit if prices fall to a certain level, and they expect oil prices to come down as low as $30 per barrel.
"The amount of queries we've received recently about leveraging bets on further price falls has been astonishing," one broker was quoted as saying by Reuters.
Traders expect the demand from Asia to be weaker as many countries in the region such as economic powerhouse China face a growth slowdown. Japan's gross domestic product (GDP) shrank in the second quarter, adding to worries.
Meanwhile, producers are not willing to cut down their output. Despite a sharp reduction in drilling rigs, US oil producers are managing to keep their output at high levels. From the Organisation of Petroleum Exporting Countries (Opec), Saudi Arabia and Iraq have ramped up production in recent months.
In addition, Iran is expected to join the producers with significantly expanded output, resulting in further fall in oil rates. In a survey conducted by CNBC, 23% respondents expect Iran to return to the market in each of the first or second quarters of 2016; another 27% expect it to be in the second half of 2016, and 14% see it happening as soon as the fourth quarter of 2015.
Iran earlier said it would increase oil exports by a million barrels per day, once the sanctions against it were lifted. The country has an estimated 50 million barrels of crude on tankers that could be sent to global markets quickly.