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Oil extends losses as output freeze hopes fade
[NEW YORK] World oil prices sank for a second straight day Tuesday as hopes faded that major crude producers would freeze output levels to ease a world surplus.
US benchmark West Texas Intermediate (WTI) for delivery in April fell 84 US cents to US$36.34 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for May delivery slid 79 US 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.
And Singapore trade minister S Iswaran told a gas conference Tuesday that crude prices are likely to remain between US$30 and US$50 per barrel this year due to oversupply, a slowing Chinese economy and Japan restarting nuclear power plants.
"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 March 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 June 2 summit instead," Mr 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.