US crude stayed below USD 30 per barrel in Asia today as oil price losses deepened on expectations US petroleum stockpiles will rise further and exacerbate the already oversaturated global market.
A rally last week driven by speculation that Russia and members of the Organization of the Petroleum Exporting Countries would reach an agreement to slash output in the oversupplied market has fizzled out amid scepticism such a deal would be reached.
Traders are expecting more bearish news when the US Department of Energy releases its weekly inventory on commercial crude stockpiles later Wednesday, with analysts expecting the inventories to rise.
An increase typically means softer demand in the world’s top oil consumer.
At around 0340 GMT, US benchmark West Texas Intermediate (WTI) for delivery in March slid 18 cents, or 0.60 per cent, to USD 29.70 and Brent crude for April dipped to USD 32.58 a barrel, down 14 cents, or 0.43 per cent.
WTI closed at USD 29.88 on the New York Mercantile Exchange on Tuesday, the first time the benchmark settled below USD 30 since January 21.
“With a build of about 4.0 million barrels expected, that’s another event that traders are expecting could push oil prices down,” Michael McCarthy, chief market strategist at CMC Markets, said, referring to the closely-watched US inventory data.
“Some of the selling that we are seeing today is in anticipation of the larger than expected build tonight,” he told AFP.
McCarthy added that hopes pinned on coordinated action between Russia and OPEC to slash output have now faded.
“The stepping away from the idea that there might have been cooperation between suppliers is another factor that is weighing on the prices,” he said.
“That shows the positioning of the market, that what was essentially a rumour was able to drive the price so much higher.”
Russia announced Tuesday that it pumped a post-Soviet record amount of crude oil and condensate in January of about 18.9 million barrels a day, as it fights to hold onto market share. OPEC in December rejected calls to trim output.