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Oil extends deep losses, WTI falls below US$30
[NEW YORK] Oil prices extended sharp losses for a second day on Tuesday as traders anticipate another rise in US crude stockpiles, worsening the global glut.
US benchmark West Texas Intermediate for delivery in March slid US$1.74 (5.5 per cent) to US$29.88 a barrel on the New York Mercantile Exchange. It was the first time WTI closed below US$30 since January 21.
In London, Brent North Sea crude for April fell to US$32.72 a barrel, down US$1.52 (4.4 per cent) from Monday's settlement.
"Indications are pointing to a fairly chunky build tomorrow," said Matt Smith of Clipper Data, referring to the Department of Energy's weekly petroleum report scheduled on Wednesday.
While traders expected more bearish news on US crude inventories, the prospects of some sort of coordinated action between Russia and the Organisation of the Petroleum Exporting Countries to cut output faded.
"Last week, several Opec and Russian officials hinted at the possibility of coordinated production cuts, which assisted in lifting crude prices above US$34 a barrel," said Robbie Fraser of Schneider Electric.
"However, this week's trading has seen crude futures move decidedly lower, as there is growing realization that a Russia/Opec effort to lift prices still faces significant obstacles."
Russia announced on Tuesday that it pumped a post-Soviet record amount of crude oil and condensate in January of about 18.9 million barrels a day, as it fights to hold onto market share.
Adding pressure on the market was the dim outlook for global oil demand.
"Weak economic data from China and the US have put pressure on prices. Consequently, the manufacturing sector in the two most important oil-consumer countries is in a recession, which is stirring up fears about future oil demand," Commerzbank said in a client note.