An oil pumpjack is seen in Velma, Oklahoma US April 7, 2016.
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Oil held declines after industry data showed USA crude stockpiles increased, swelling supplies already at a seasonal high.
Venezuela, a member of the Organization of the Petroleum Exporting Countries, is trying to drum up support for a producer meeting to decide measures that would buoy oil prices.
“US regular-grade gasoline prices are now at a 16-week low and are expected to continue falling to a monthly average of less than $US2 a gallon by the end of the year”, EIA administrator Adam Sieminski said in an emailed statement. NYMEX crude for September delivery was down 36 cents at $42.66 a barrel, after closing up $1.22, or 2.9 percent, on Monday.
“I think you’ll see WTI going back below $40 in the next couple of weeks and fall will likely be a bad time for oil”.
WTI, or the West Texas Intermediate benchmark for USA crude, settled down US25 cents, or 0.6 per cent, at $US42.77 a barrel.
The recent increase in global output has upended many analysts’ earlier prediction that the oil market is tightening.
More than 16,500 lots of WTI put options for $US40 were traded on Tuesday as traders hedged against a potential market tumble. Brent crude, used to price worldwide oils, was down 41 cents, or 0.9 percent, to $44.98 per barrel in London. It slid to $US44.76 after the API numbers.
Just a day ago, oil prices had rallied, with WTI gaining almost three per cent, rebounding from last week’s selloff when it fell to an April low of $US39.19.
Traders said that markets were being weighed down by an ongoing supply overhang in crude and refined fuel products, and that a suggested meeting by oil producers was unlikely to result in a significant market tightening.
OPEC’s biggest producers have also been pumping near record high levels.
Al-Sada, who is also Qatar’s Energy Minister, in a statement, said since February 2016, oil prices had experienced a steady improvement following a decline in crude oil production, supply outages and a decrease in oil inventories, while the global demand for oil improved in that period.
Even if a freeze pact is reached, the impact on prices could be limited because most of the producers are already producing at a full tilt and have little spare capacity to expand, said Thomas Pugh, commodities economist at Capital Economics.
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China’s Shanghai Composite index dropped 6.93 points or 0.23 percent to 3,018.75 as investors awaited industrial output, fixed asset investment and retail sales data due Friday.
