Oil prices have largely ignored geopolitical events last week amid a supply glut, which cushions against potential disruptions as tensions between Saudi Arabia and Iran escalate. Since the selloff in oil began 18 months ago, traders and investors have wondered how long and deep the slide would go as prices fell from above $100 a barrel to below $40, and looked poised to break below $30 next.

In late afternoon trade on Thursday, Brent prices stood at $33.93 a barrel, down 30 cents from Wednesday's closing level.

Oil has bounced a bit in early-afternoon trading (see chart) after both measures plumbed their lowest levels over a decade earlier on Thursday. Oil Futures soared by volatility in Chinese markets, rallying from a 12-year low as the country pursued to quell fatalities in equities and alleviate its currency.

The U.S. government also announced data on Wednesday that showed a rise in gasoline stocks by 10.6 million barrels, more than expectations of analysts. Investors are also upset that Beijing has allowed the yuan to weaken, a possible sign the world's second-largest economy is in worse shape than previously thought.

Meanwhile, analysts believe that the further that oil prices fall in the near term, the stronger the supply and demand responses are likely to be, and the sharper the subsequent rebound.

Photo: activistpost.com