Oil prices fell in Asian hours today as traders awaited the release of US crude inventory data, which are expected to show a further rise in stockpiles.
After closing higher yesterday on fresh Russian calls for a production freeze to reduce the global supply glut, US benchmark West Texas Intermediate for delivery in April was 39 cents (1.13 per cent) down at USD 34.01 around 0545 GMT in New York.
Brent North Sea crude for May delivery was 16 cents (0.43 percent) lower at USD 36.65 in London.
“US crude oil inventories increasing is almost becoming a norm. Inventories are already at a historic high” and markets are taking a nonchalant stance towards a continued inch upwards, said Daniel Ang, investment analyst at Phillip Futures in Singapore.
“US production, on the other hand, is slightly more interesting as it is finally starting to show corrections. We highly expect to see US oil production drop a lot more now that prices are in the USD 30 region, which could result in the easing of global oil supply,” he added in a note.
A Bloomberg News survey ahead today’s Energy Information Administration (EIA) report showed that US crude stockpiles probably increased 3.4 million barrels from an 86-year high last week.
The EIA is projected to report that supplies of gasoline and distillate fuel, a category that includes diesel and heating oil, dropped, Bloomberg added.
Oil prices had risen yesterday on increasing optimism of an output freeze to shore up the market as Russia said domestic oil groups supported the proposal.
Opening a meeting with Russian oil group chiefs, President Vladimir Putin said Energy Minister Alexander Novak had led discussions on forging a freeze agreement between producer countries.
He said the idea was to “fix Russia’s 2016 production level at that of January,” which was a post-Soviet record of 10.8 million barrels per day on average.
The market gained a lift in the latter half of February when OPEC kingpin Saudi Arabia and non-OPEC member Russia agreed to freeze output to January levels, if other major producers followed suit.
But disappointment that there was no output cut, and skepticism that such a freeze could be agreed, has contributed to recent market volatility.