Dow e-minis were down 380 points, or 2.26 percent, with 99,258 contracts changing hands at 8:13 a.m. ET (1313 GMT). S&P 500 e-minis were down 45 points, or 2.27 percent, with 578,860 contracts traded. Nasdaq 100 e-minis were down 130.25 points, or 2.93 percent, on volume of 108,831 contracts.

Crude oil prices ended 2015 below $40 per barrel (b), the lowest level since early 2009. Spot prices for the international crude oil benchmark Brent averaged $52/b in 2015, 53% below the level in 2014 and 49% below the average price over 2010-14. Spot prices for West Texas Intermediate (WTI) crude oil were also down 53% in 2015 compared with 2014, averaging $49/b for the year.

"We will be more subtle in our approach and may gradually increase output," Qamsari said. "I have to say that there is no room to push prices down any further, given the level where they are."

Underground sites are slated to hold about 130 million barrels, which would account for nearly a quarter of the 550 million-barrel SPR target set by Beijing for 2020, according to local media and analysts.

“Given the volumes of gas shipped to Europe, the marginal cost of additional Russian gas is low and they should be able to compete with US LNG supplies,” said Malcolm Johnson, a Guildford, England-based faculty member of The Oxford Princeton Programme, an energy training provider. “However, it is clear that in certain countries there is a desire to diversify supplies for supply security.”

West Texas Intermediate crude for February delivery declined to $36.58 a barrel on the New York Mercantile Exchange, after falling 0.8 percent Monday. U.S. crude inventories are forecast to keep supplies more than 130 million barrels above the five-year seasonal average, according to a Bloomberg survey before government data Wednesday.

While tens of thousands of jobs have already been cut in 2015, more redundancies are expected this year as companies narrow their focus.

Moody’s last month also projected average prices of West Texas Intermediate crude at $40/bbl in 2016, $45/bbl in 2017, and $50/bbl in 2018. The 2016 price is down $8/bbl from the firm’s earlier forecast.

Iran's deputy oil minister for commerce and international affairs, Hossein Zamaninia, said Tehran had identified nearly 50 oil and gas projects worth $185 billion that it hoped to sign by 2020.

Iran, which holds the world’s largest gas reserves, was aiming to double its gas production in the next 30 months and to raise its share of global cross-border gas trade from a minuscule one per cent at present to ten per cent at some unspecified future date. In production terms, this means increasing output from 172.6 bcm in 2014 (five per cent of the total world output) to around 350 bcm in 2018-19.

The changes come at a difficult time for the Saudi kingdom, which is still adjusting to last year's leadership transition while also facing pressure from regional rivals like Iran.

“While the UK offshore oil and gas industry is having to adapt to the low oil price and driving greater efficiencies throughout its operations the fact is that the value of our product has more than halved," she said. "Times are really tough for this industry and for the people working in it. We will continue to see job losses as we move into 2016 and we must be thoughtful and supportive of our colleagues and their families who are being made redundant or who are at risk of being made redundant."

U.S. Rig Count is down 2 rigs from last week to 698, with oil rigs down 2 to 536, and gas rigs are unchanged from last week, at 162.

With no growth and no profits, the US exploration and production industry is facing a gruelling year. The gap between strong and weak companies is likely to widen. Those that have lower-cost production and healthier balance sheets should be able to stay in business. Those that have good assets but big debts may have to sell their most valuable properties. Those that have neither attractive assets nor strong finances will be heading for bankruptcy.

West Texas Intermediate (WTI) and Brent, two of the major crude oil benchmarks, account for about 69% of the weighting in the S&P GSCI Energy index. As a result, the energy index tends to follow major price movements in the crude oil market. With sustained, high crude oil production from countries like Saudi Arabia, Iraq, the United States, and Russia, global liquid fuel inventories rose significantly in 2015, resulting in crude oil prices falling to 11-year lows in December.