Oil prices fell further Monday on persistent worries about China's growth slowdown and a supply glut, but analysts said tensions between producer giants Iran and Saudi Arabia could provide some support.

US benchmark West Texas Intermediate for February delivery was down 65 cents at $32.51 by 0600 GMT, while Brent was down 75 cents at $32.80.

Both contracts slid about 10 percent last week to 12-year lows as global markets were hammered by concerns about China, the world's biggest energy consumer, which overshadowed a strong US jobs report.

"Sentiment indicators are all to the extreme sell," Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg News.

"Until we see a supply-side response, the potential for significantly higher prices is low."

Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services organisation EY in Singapore, said: "Rising tensions between Saudi Arabia and Iran could support the upswing of oil prices in the short term."

But he added that oil markets would be closely tracking new economic data from Europe and China, and "further signs of a slowdown will put further downward pressure on the price of crude".

On Sunday top Arab diplomats rallied behind Saudi Arabia in a dispute with Iran that has threatened to derail efforts to resolve Middle East conflicts including the war in Syria.

The row between the two major oil producers erupted on January 2 after Saudi Arabia executed a prominent Shiite cleric along with 46 others on terrorism charges.

Crude oil prices try to recover
New York (UPI) Jan 8, 2016 –

Crude oil prices opened flat to slightly higher to cap off a week of steep declines as Chinese stock markets closed Friday without a hitch.

A so-called circuit breaker twice shut down trading early this week after the benchmark Shanghai Composite Index lost around 7 percent of its value. The government abandoned the emergency switch after trading Thursday, seemingly putting an end to panic sell-offs.

The Shanghai Composite closed Friday up about 2 percent. Justin Yifu, a former economist with the World Bank, was quoted by China's official Xinhua News Agency as saying the Chinese economy was in a state of transition and still has internal structural problems.

"However I think the deceleration since the beginning of 2010 is mainly due to external and cyclical issues," he said.

Compared with successive days of declines of more than 2 percent, crude oil prices staged a rally at the opening of trading in New York. Brent crude oil gained about 0.3 percent to start the day at $33.85 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, gained 0.4 percent to trade at $33.39 at the open.

Crude oil prices are off about 70 percent from June 2014 as the surplus of production is too much for the global economy to accommodate. The sustained slump has put downward pressure on some major economies like Russia's and Saudi Arabia's, which depend heavily on oil for revenue

Christine Lagarde, the managing director for the International Monetary Fund, said at an economic forum in Cameroon the slump in oil prices may be prolonged.

"Unlike in previous cycles, oil prices this time around are expected to stay low for long," she said. "Indeed, futures markets point to only a modest recovery of prices to about $60 by 2019."

Some positive support may come from U.S. labor figures, which show hiring remains robust despite lackluster economic growth. The unemployment rate in the country is holding steady at 5 percent.