West Texas Intermediate futures for February delivery fell to $32.54 (-1.87%), while Brent crude dropped to $32.83 (-2.15%) suggesting that weak economic outlook for China will prolong the period of low prices. "Chinese oil data are finally starting to reflect weak economic activity. Implied oil demand in China contracted 4.9 percent (537.3 thousand barrels per day) month-on-month and 2.0 percent (216.7 thousand barrels per day) year-on-year in November, the first decline since July 2014," Barclays said on Friday.

Data showed that speculators have cut their net-long positions to fewer than 50,000 contracts (50 million barrels), and added to their net-short positions. This means that traders don't expect prices to rise soon.