Traders were cautious ahead of the release later Wednesday of data on US commercial crude stockpiles which have been rising for weeks, indicating softer demand in the world’s top energy consumer.
US benchmark West Texas Intermediate (WTI) for delivery in April was down 67 cents, or 2.10 percent, at $31.20 and Brent crude for April fell 44 cents, or 1.32 percent, to $32.83 a barrel.
WTI tumbled 4.6 percent and Brent tanked 4.1 percent on Tuesday.
“We think that it’s inevitable that oil prices move back below the $30 market soon as supply continues to outstrip demand and inventory levels are very high,” Jason Wong, a currency strategist in Wellington at Bank of New Zealand said in an e-mail to clients, according to Bloomberg.
Saudi Arabia and Russia — the world’s top oil producing nations — had proposed to freeze output if other producers followed suit, briefly perking up prices which fell to near 13-year lows on February 11.
But Iranian Oil Minister Bijan Zanganeh described the proposal as a “very funny joke”, as production levels vary widely among oil producers.
There was currently a “litany of oil-negative comments”, said Bernard Aw, market strategist at IG Markets in Singapore
“Saudi oil minister said the country will not reduce output, while Iran said the Saudi-Russia pact is ‘ridiculous’ amid plans to raise Iranian oil output”.
He added: “These developments reinforced my view that there is unlikely to be any concrete plans to ease the supply glut in the near term. Any solutions may be demand-led when the global economy picks up pace.”
While trimming production may be out of the picture for now, Saudi Oil Minister Ali Al-Naimi said he remained hopeful other producers would join a tentative freeze to January output levels it had agreed with Russia, Qatar and Venezuela last week.
He said freezing output was more realistic than cutting because “not many countries are going to deliver, even if they say they will cut production”.