Oil extends losses as output freeze hopes fade

11:32 | 16/03/2016 Global Economy

World oil prices sank for a second straight day on Tuesday as hopes faded that major crude producers would freeze output levels to ease a world surplus.

Oil extends losses as output freeze hopes fade

A motorist filling up his vehicle at a petrol kiosk - (Photo: AFP)

US benchmark West Texas Intermediate (WTI) for delivery in April fell 84 cents to US$36.34 a barrel on the New York Mercantile Exchange. Brent North Sea crude for May delivery slid 79 cents to US$38.74 a barrel in London.

Crude prices pulled up from their January lows helped by talk of an output freeze led by Russia and Saudi Arabia. But this week those hopes have turned to skepticism.

"The price of Brent crude has fallen four of the last six days, its worst run in three weeks as chances become more remote of a joint output freeze amongst OPEC and non-OPEC producers while Iranian production ramped up significantly last month," said CMC Markets analyst Jasper Lawler.

A meeting proposed by Russia and Saudi Arabia to discuss output limits has been pushed back to April from Mar 20.

Tim Evans of Citi Futures said the downturn in the market reflects "wider recognition that the proposed output 'freeze' for OPEC and major non-OPEC producers represents more of a status quo than a supportive change."

"A meeting may yet take place in April, but we wouldn't be surprised if the campaign for the meeting doesn't soon shift to a lobbying effort targeting OPEC's scheduled Jun 2 summit instead," Evans said.

Investors also were awaiting the official US weekly report on petroleum inventories on Wednesday, with expectations there will be an increase in already soaring commercial crude stockpiles./.

 

Source: ChannelNewsAsia

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