Oil price skids on fears for world economic growth

On Wall Street, stocks saw a rebound in early business after Monday's rout, but equity markets remained subdued in Europe, except for Frankfurt which posted small gains.

The Brent and New York crude contracts collapsed as low as $57.20 and $47.84 per barrel respectively during the European morning session, but pared losses by the afternoon.

"Stocks have not been the only victims of broader market misery this festive season," said Oanda analyst Craig Erlam.

"Oil tumbled ... as equities plunged into the red as investors continue to view 2019 as a challenging year for global growth."

Challenging year

There are also questions about the impact of a recently promised output cut by OPEC and other top producers including Russia.

"OPEC may have come to an agreement with its allies to cut production next year and rebalance markets ... but traders are clearly not convinced enough will be done," predicted Erlam.

Crude prices have fallen about a third from four-year highs touched at the start of October.

"The crash seen in the price of crude oil over the past few months has arguably been the biggest story of the year," noted XTB analyst David Cheetham.

"Fears that Iranian sanctions reimposed by Washington would cause a drastic fall in output saw the market rally to its highest level in almost four years ... but these concerns now look badly misplaced."

'A lot of pessimism

Asia posted sharp losses earlier in the wake of Monday's Wall Street selloff, as investors also awaited the US Federal Reserve's interest rate decision due later this week.

The British stock market meanwhile remained beset with worries over the nature of the nation's looming exit from the European Union next March.

"There is a lot of pessimism in the markets right now," said Erlam.

Dealers across the world have taken fright over a range of issues, including the China-US trade war, falling oil prices, political uncertainty, China's stuttering economy and geopolitical tensions.

Also weighing on confidence has been the Fed's monetary tightening drive that has seen it lift interest rates through the year, making it more expensive to borrow cash for investment.

The US central bank concludes its latest policy meeting Wednesday and is widely expected to announce another hike.

US President Donald Trump on Tuesday once again hit out at the bank's policy and called on it not to lift rates again.