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 International benchmark Brent futures lost 6 cents to $36.87 a
barrel by 1200 GMT (0700 ET), while U.S. crude futures edged up 6
cents to $34.72.
"Prices must fall once again to reach bottom in a way that really
shuts down production. I don't think a freeze is the solution,"
Natixis commodities strategist Abhishek Deshpande said.
"That is the only true way of really turning around prices
sustainably and for good ... once that happens, there will be a true
turning point and, for me, that kind of bottom is still below $25."
U.S. crude inventories rose 10.4 million barrels to a fresh record
of 517.98 million barrels last week. [EIA/S]
Around 1 million to 2 million barrels of crude are being produced
globally every day in excess of demand, contributing to a 70 percent
fall in oil prices since mid-2014.
An agreement struck in February by some big producers, led by Russia
and Saudi Arabia, to freeze output at January levels is expected to
do little to reduce the oversupply, not least because output in the
first month of the year was at, or near, record highs.
"We continue to remain wary of possible rallies," said Daniel Ang of
brokerage Phillip Futures.
Prices have risen since February thanks to slowing U.S. output and
signs of financial distress among the higher-cost producers that
might signal further supply cuts.
U.S. crude output fell for a third month in December, as struggling
oil companies succumbed to the price rout.
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Seasonally, the second quarter of the year tends to be one of the
weakest, as spring refinery maintenance cuts crude demand.
Reuters data shows on average over the last 15 years, Brent has
gained 4.9 percent in the second quarter, compared with an average
gain of nearly 7.5 percent in the third quarter, usually the
strongest in terms of price performance.
Market watchers have said there has been more bullishness spreading
through the market.
"The market has suddenly started to focus on bullish headlines. This
has created huge inflows, buying from hedge funds," said Oystein
Berentsen, managing director of crude at Strong Petroleum in
Singapore.
(Additional reporting by Henning Gloystein and Manesha Pereira in
SINGAPORE; Editing by Susan Thomas and Dale Hudson)
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