By Abhiram Nandakumar
REUTERS - Wall Street were set to open sharply lower on Friday, as oil prices dived below $30 per barrel, sending fresh tremors through financial markets globally as investors fret about a prolonged economic slowdown.
Brent crude prices, which have fallen 20 percent this year, were down nearly 5 percent as the market braced for oil from Iran to flood an already oversupplied market.
World stocks were set for a third straight week of losses.
"Oil is deeply oversold. The stock market is deeply oversold. The inability for the market to rally from deeply oversold conditions clearly tells you how weak the market is," said Adam Sarhan, chief executive of Sarhan Capital in New York.
Oil prices flirting with 12 year lows and the Federal Reserve tightening policy is "a one-two punch that the stock market just can't handle," Sarhan said.
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U.S stock have been in a steep selloff since the start of the year amid concerns about a slowdown in China and global growth. But, a rebound in oil prices fueled a rally on Thursday.
At 8:52 a.m. ET (1352 GMT), Dow e-minis were down 405 points, or 2.49 percent, with 93,789 contracts changing hands.
S&P 500 e-minis were down 48.75 points, or 2.55 percent, with 526,497 contracts traded.
Nasdaq 100 e-minis were down 122.25 points, or 2.87 percent, on volume of 85,651 contracts.
All 30 Dow components were in the red in premarket trading. Exxon and Chevron were down 3-3.5 percent, while Caterpillar dropped nearly 4 percent.
But the biggest drop was in Intel, tumbling 5.5 percent to $30.95 as concerns about the chipmaker's slowing data center revenue growth overshadowed a quarterly profit beat.
Citigroup was down 2.4 percent at $44.30 while Wells Fargo fell 2.5 percent to $49.39 after reporting largely in-line quarterly earnings.
Investors are bracing for weak earnings reports with companies hit by plunging oil prices, concerns over China's economy and a global economic slowdown.
Data on Friday showed an unexpected 0.1 percent fall in U.S. retail sales in December as unseasonably warm weather hurt sales of winter apparel.
U.S. industrial output is likely to have declined marginally in December, data at 9:15 a.m. is expected to show. The University of Michigan's preliminary consumer sentiment index, due at 9:55 a.m., is expected to rise in January.
Fed policymakers have hinted at slowing the central bank's rate hike program should the economy not show signs of stability.
(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza)