Oil dropped after Saudi Arabia, the world’s biggest crude exporter, said low prices won’t reduce its spending on energy projects and China’s diesel demand fell for a fourth consecutive month.

Futures tumbled 5.8 percent in New York. Saudi Arabian Oil Co., also known as Saudi Aramco, is maintaining its investment plans despite the rout in the crude market, Chairman Khalid Al-Falih said Monday. Diesel use in China dropped 5.6 percent in December compared with a year earlier and gasoline consumption grew at the slowest pace in more than two years.

Oil resumed its decline after the biggest two-day rally in more than seven years as concerns persist over ample U.S. stockpiles, steady production from Saudi Arabia and Russia and the outlook for increasing Iranian shipments after the end of sanctions. Prices may take as long as three years to normalize, according to Bank of Montreal Chief Executive Officer William Downe.

West Texas Intermediate for March delivery dropped $1.85 to close at $30.34 a barrel on the New York Mercantile Exchange. Total volume traded was 28 percent higher than the 100-day averageat 2:57 p.m. Front-month prices rose 21 percent over two sessions at the close Friday after the February contract expired Wednesday at $26.55 a barrel, the lowest since 2003.

Brent for March settlement fell $1.68, or 5.2 percent, to end the session at $30.50 a barrel on the London-based ICE Futures Europe exchange. The contract gained 10 percent to $32.18 Friday. The European benchmark crude closed at a 16-cent premium to WTI.

Source: Bloomberg