Brent for April settlement dropped $1.52, or 4.4 percent, to $32.72 a barrel on the London-based ICE Futures Europe exchange on Tuesday.
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The 70 percent drop in the crude price over the last 18 months has hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia and even some of the richer Gulf nations such as Bahrain.
A rebalancing between oil demand and supply will not be seen until mid-2017, Morgan Stanley said in a note on Wednesday.
West Texas Intermediate and Brent both closed at the lowest level since 2003 on January 20.
Nymex reformulated gasoline blendstock for March-the benchmark gasoline contract-fell 184 points to $0.9824 a gallon, while March diesel traded at $1.0099, 10 points lower. The European benchmark crude ended the session at a premium of US$1.11 to WTI for April.
“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.
This helped push the price of oil, which had earlier been set for a third day of declines after data on Tuesday showed another big build in US inventories, off the day’s lows.
The fading alliance between Russian Federation and the Organization of the Petroleum Exporting Countries for collective crude oil production cuts and the consensus of the rising U.S. crude oil inventory are weighing on crude oil prices. And while the IEA sees supply outside OPEC sliding, it warned last month that “the oil market could drown in oversupply”.
While prices continue to fluctuate, buy the December 2016 WTI contract below $40 a barrel because prices are forecast to average $48 by the end of the year, according to Mark Keenan, the head of commodities research for Asia at Societe Generale in Singapore.
Adding pressure on the market was the dim outlook for global oil demand. The official data will be released by the Energy Information Administration later on Wednesday and analysts surveyed by The Wall Street Journal survey predict an increase of 3.5 million barrels.
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Meanwhile, the prolonged downturn in prices has crushed the oil majors’ results.
