Global oil prices sank closer to $US30 ($NZ45.70) per barrel yesterday - hitting 12-year lows - and some analysts have repeated predictions prices will fall as low as $US20 a barrel.
Craigs Investment Partners broker Peter McIntyre said a 6% plunge in global oil prices hit energy and materials stocks in the United States, limiting gains on the main US indexes.
However, the S&P 500 and Dow Jones snapped a three-day losing streak following the worst opening week in the history of the exchange.
"Oil came down with a thump overnight, losing about 6%,'' Mr McIntyre said yesterday.
Despite recurring predictions of prices of $US20 a barrel, several Middle Eastern countries are expected to increase production in order to maintain market share in coming months.
Wall Street struggled to make gains in volatile trading yesterday, weighed down by healthcare stocks and oil prices hitting 12-year lows, as the start of the corporate earnings season looms, Reuters reported.
Oil prices fell for a sixth straight session to start the new year, as traders cited fears over slowing demand in China.
US crude prices settled down 5.3% at $US31.41 a barrel, while the benchmark North Sea Brent dropped 6% to $US31.55 a barrel.
Mr McIntyre said the main reason picked by analysts for the lower oil and and commodity prices was China's economic slowdown, which had resulted in the yuan weakening and the two emergency suspensions of bourses in China last week.
He said traders had increased their bets against any near-term recovery in the oil price, while speculators increased their net short positions to a record high in the week to last Tuesday.
"It's a sign they are losing faith in a price rise any time soon,'' Mr McIntyre said.
China's main stock indexes each dropped more than 5% yesterday.
Oil prices fell to 12-year lows as concerns over China hurt commodity prices broadly, Reuters reported yesterday.
Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana, noted that weak signs from China and falling oil prices had recently pressured stocks.
"You had both those things happen today and the market managed to finish upward.
"The fact that it did hold up for the same reasons that it seemed to go down last week, that's a victory,'' Mr Carlson said.
The Dow Jones industrial average gained 52.12 points, or 0.32%, to 16,398.57, the S&P 500 was up 1.64 points, or 0.09%, to 1923.67 and the Nasdaq Composite lost 5.64 points, or 0.12%, to 4637.99.
Energy shares led declines, while the healthcare sector fell 1.2% as Celgene Corp weighed after posting a disappointing financial outlook.
Investors were looking to United States corporate earnings to help provide confidence.
The major banks are to report later this week. Expectations are for a second consecutive quarter of overall declining earnings.
"We are going to start to get into earnings season and that is going to begin to be the bigger cue for this market,'' Mr Carlson said.
