Oil prices extended the previous session's losses on 26 January as they plunged below the $30 (£21.1, €27.7) a barrel threshold amid ongoing concerns over a global oversupply and fresh worries over a slowdown in China.

Shortly into the European session, Brent crude was down 2.28% to $29.82 a barrel, while West Texas Intermediate tumbled 2.29% to $29.66 after data showed China's annual rail freight volume, a key economic indicator, plummeted 11.9% in 2015 compared with a 3.9% slide in the previous 12 months.

"Nearly all of Friday's gains were wiped out as the old concerns of oversupply and financial solvency of suppliers once again reasserted themselves, as producers continued to pump at record rates," said CMC Markets chief market analyst Michael Hewson.

Having closed to their highest level for in two weeks on 22 January, oil prices resumed their slide on 25 January, after Iraq announced record-high oil production feeding into an already over-supplied market. The country, a member of the Organization of the Petroleum Exporting Countries (Opec), may raise its annual output from the current 3.7 million barrels per day (bpd) to four million bpd, an official source said on 26 January,

Earlier in the session, Kuwait's Opec governor hinted the cartel would not cut its output when non-Opec producers were increasing production and suggested both parties should work together to reach a solution.

However, Saudi Arabia, the world's main oil exporter remains determined to expand its market share and Saudi Aramco's chairman said the firm would continue to invest in oil and gas production capacity.

"It is foolish to believe anyone but Saudi Arabia will be the master of Opec's fate, given the clear disregard the nation has shown towards the wishes of fellow members who desperately need higher oil prices to balance the books," said IG market analyst Joshua Mahony. "Oil will remain low for as long as Saudi Arabia deems it necessary."

News that Russian producers were pumping at the highest post-Soviet rate did little to lift the morale among investors, who will closely monitor a two-day Federal Open Market Committee meeting which kicks off on 26 January. The meeting, the first since the Federal Reserve lifted interest rates in December 2015, could have implications for the movement of the dollar.

"Last month's long anticipated rate increase served to push the US dollar back towards its recent highs," said Hewson. "Unfortunately for the Fed this appears to have largely been a problem of their own making with their expectations management somewhat lacking in the weeks since that meeting, as markets look to price in another three-four rate rises in 2016. This could well be corrected tomorrow evening and in this regard the statement is likely to be particularly important."