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U.S. gasoline demand, one of the strongest pillars supporting
oil consumption, fell in January for the first time in 14
months, U.S. Energy Information Administration data showed.
The world's largest oil producers are due to meet in Doha on
April 17 to negotiate an output freeze, but a jump in Russian
oil production to a 30-year high in March has cast doubt over
the chances of an output cap being agreed.
Brent crude, the global oil price benchmark, was down 26 cents
at $37.43 a barrel at 1000 GMT (6.00 a.m. ET), its lowest since
March 4.
U.S. futures fell by 21 cents to $35.49, also a one-month low.
"The market was surprised by two figures: Russian production at
a 30-year high and U.S. gasoline demand dropping for the first
time in 14 months," said Frank Klumpp, oil analyst at
Stuttgart-based Landesbank Baden-Wuerttemberg.
"As long as most speculative money is long-positioned, there is
more room for closing positions and falling prices."
Analysts at BNP Paribas agreed that oil prices could slide
further, saying an emerging gasoline glut could add to a global
overhang in crude output that exceeds demand by more than 1
million barrels of oil a day.
"Global oil balances will witness sizeable implied inventory
builds in the first half of 2016, suggesting that the price of
oil can easily revisit the lows seen earlier this year," they
wrote in a report.
The OPEC governor of Kuwait said on Tuesday that an agreement at
the Doha meeting could freeze production at February levels or
an average of January and February.
Nawal Al-Fuzaia also said that she expects Brent crude to
average between $45 and $60 a barrel in the second half of this
year and for supply and demand to balance by year-end.
(Additional reporting by Henning Gloystein in Singapore; Editing
by David Goodman)
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