TOKYO: Oil prices fell in Asian trade on Tuesday, extending losses from the session before as concerns start to take hold that a six-week recovery will peter out as markets remain oversupplied.
Saudi Arabia and non-OPEC member Russia, the world’s two largest oil exporters, along with Qatar and Venezuela said last month they would freeze output at January levels to prop up prices if other oil-producing nations agreed to join the first global oil pact in 15 years.
But with U.S. crude stockpiles continuing to build and Iran showing little interest in joining major producers in freezing production, oil prices may have gained too much too soon in recent weeks.
“With the focus still on an output agreement, oil markets are likely to remain susceptible to further sell-offs as producers baulk at cutting production,” ANZ said in a note on Tuesday.
U.S. crude futures were 14 cents lower at $37.04 a barrel at 0229 GMT. On Monday, they settled down 3.4 percent at $37.18 a barrel.
Brent was down 20 cents at $39.33, after finishing the last session at $39.53.
Crude inventories across the United States likely hit record highs for a fifth straight week last week, rising 3.3 million barrels, a Reuters poll of analysts said.
Saudi Arabia kept its crude oil production steady in February at just above 10 million barrels per day (bpd), suggesting the world’s biggest oil exporter is keeping to its preliminary deal with other producers to freeze output.
Meanwhile, with sanctions on Iran removed in January, Tehran is keen to increase its production of crude to levels before the restrictions hit exports.
Iran currently produces around 3.1 million bpd of oil. The sanctions also cut crude exports from a peak of 2.5 million bpd before 2011 to just over 1 million bpd in recent years.