The global oil benchmark Brent price slumped 6.6 per cent to $US31.31 a barrel today in a move that may mean petrol price relief for Aussie motorists.

The falls extended this year’s 15 per cent slide, in little more than a week and traders are betting the world’s second largest consumer of oil China will demand much less of the commodity in 2016

“What we’ve really seen is a bit of a capitulation whereby many people who are holding some hope – a beacon of hope for oil – have now basically taken their bets off the table and we’ve seen oil really hit,” said Elio D’Amato, the chief executive of Lincoln Indicators.

Australian shares also continued their fall  closing weaker for an eighth straight day despite a some hopeful looking strength in early trade when stocks bounced one per cent higher.

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However, the investors resumed selling the financials, which joined big miners  in dragging markets lower, after global oil prices plumbed fresh 12-year lows and two investment banks called on clients to sell.

At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 7.1 points, or 0.14 per cent, to 4925.1, while the broader All Ordinaries index had lost 8.5 points, or 0.17 per cent, to 4982.2.

Today’s negative oil  trade extends the local market’s longest losing streak since mid-2010, sparked by renewed worries about China’s shaky economy and the ruling party’s prospects of managing the country’s economic transition.

The price of oil is falling because of both demand and supply problems.

After a week of Chinese market mayhem and expectations that the country will continue to devalue its currency, traders are betting that China will significantly pull-back on its oil consumption.

In addition, while the OPEC [Organisation of Petroleum Exporting Countries] cartel would normally step in and cut supply to force the price up, the advent of competing shale energy companies has prompted the organisation to keep prices low in an attempt to kill-off those higher cost producers.

“There is a bit of Game of Thrones at play in regards to OPEC at the minute,” said Mr D’Amato.

“There is talk that, you know, it would make sense that they cut production but it is also a political play in the sense that there is talk that hitting or making oil prices fall as much as they can will hit a lot of those emerging producers particularly the shale gas and shale oil producers of the US.”

Mr D’Amato said the key question is how long many of the higher cost producers can stay in business.

“So what we are seeing is a game of attrition whereby eventually someone will have to stop when the music stops and who gets to miss out on the chair,” he said.

“OPEC is in the position whereby they can support lower-cost production rather than the higher-cost US shale assets.”

Oil price bounce nowhere in sight: analysts

Analysts cannot yet see an end in sight to the supply war.

“I think by most estimates the global [over]supply is only going to get worse over the next couple of months into the end of the first quarter,” JP Morgan global market strategist David Stubbs told Bloomberg.

He said lower oil prices will be around for the remainder of 2016.

“I don’t know where it’s going to go for a dollar here or a dollar there, but I don’t see a recovery above say [$US]50 by the end of the year,” Mr Stubbs added.

So will that mean lower prices at the pump for Australian motorists?

Elio D’Amato said the answer is yes, assuming the Australian dollar does not fall too much lower from where it is currently trading against the greenback around 70 US cents.

“I think it’s fair to suggest that there will be, over the coming weeks, an easing in regards to prices for consumers at the pump,” he forecast.

“Ultimately, most of us are oil consumers not oil producers, so a lower oil price should work for the benefit of not only us as consumers but the businesses we invest in.”

News also circulated overnight that Saudi Arabia is considering floating part of its state-owned oil producer, Aramco, a company worth as much as $10 trillion.

The company could be 20 times more valuable than Exxon Mobile and analysts said a privatisation might result in even lower oil prices.

-ABC