Here's what's really needed to stop oil's fall

It will take more than strong demand from China to curb oil's massive slide.

China's crude oil imports hit a record 7.82 million barrels a day in December, customs data showed, totaling 33.19 million tons, up 21.4 percent on the month and 9.3 percent on the year. That's well above earlier estimates by Thomson Reuters Oil Research and Forecasts.

The data brought oil futures sharply higher a day after West Texas Intermediate fell below $30 a barrel for the first time since December 2003. The market, however, was unable to sustain the rally as a surprise build in U.S. oil and gasoline inventories weighed.

"Getting a grasp on what's really going on with some of these weekly numbers can be difficult, but ultimately the way we look at it is demand growth has been pretty resilient over the last 12 months, and we expect that to continue through most of 2016." Scott Hanold, an oil analyst at RBC Capital Markets, told CNBC's "Squawk on the Street" on Wednesday. "Now the key here is to see some producer reaction to these low prices, and ultimately we've seen some, but not enough."

He also expects production cuts from non-OPEC countries — led by the United States — as the cartel remains unwilling to lower its output.

U.S. crude prices held slightly higher in afternoon trade, at about $30.50, but well below its session highs of $31.70.

Eric Lee, commodities strategist at Citigroup, said Wednesday oil could fall below $20. "In the first half of this year, there's going to be a lot more that buffets this market. For now, it's going to be hard for longs to join the market, so you could well see us back into the $20s again," he said on "Squawk on the Street."

"I think that what we've seen is a massive, structural change in oil markets due to a technological shock that was not necessarily predictable, and that was shale," Lee said. "If you ask me, the 2000s were a story of massive commodity-intensive growth in China. It was a period of time when they were organizing extremely quickly, industrializing extremely quickly, which is very commodity intensive."

— Reuters contributed to this report.