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[SINGAPORE] Oil prices clung to steep losses in early Asian trading on Monday as production outpaces demand and US crude stocks swelled to record levels.
US West Texas Intermediate (WTI) crude futures traded up just three cents to US$29.67 per barrel by 0037 GMT, following an almost 4 per cent drop on Friday. International benchmark Brent was up two cents at US$33.03 per barrel after also falling almost 4 per cent in the previous session.
Record US crude stocks of 504.1 million barrels pulled back gains from last week's relief rally on the announcement of a production freeze by Russia and the Organisation of the Petroleum Exporting Countries (Opec).
"Crude stocks in the US are at record highs and production is also at or near records and remains way above daily demand, so freezing production at current levels won't reduce the glut, but will actually add to it further," one oil trader said.
With production outpacing demand by 1-2 million barrels every day, crude prices have fallen around 70 per cent since mid-2014.
Analysts also said that some producers seemed to show little commitment to a deal reached by Russia and Opec leader Saudi Arabia, and supported by Qatar and Venezuela, to freeze output at January levels. "The lack of commitment from some Opec members on a production freeze remains the key headwind short term," ANZ bank said on Monday.
Opec-member Iran has shown little interest in restraining production as it was only allowed a full return to oil markets in January following years of sanctions.