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Saudi Oil Minister Ali al-Naimi said production cuts would not
happen although more countries would join a deal to freeze
output. OPEC and non-OPEC producers who support the idea are
planning a mid-March meeting, his Venezuelan counterpart said.
"Al-Naimi's remarks punctured an oil-price rally that has lacked
substance," said David Hufton of broker PVM. "The market
correctly interpreted the presentation as bearish."
Brent crude was down 88 cents at $32.39 a barrel at 1220 GMT
(07:20 a.m. EST). U.S. crude fell $1.17 to $30.70. Both dropped
more than 5 percent in intra-day trading on Tuesday.
Also pressuring prices, the American Petroleum Institute (API),
an industry group, said on Tuesday crude inventories rose by 7.1
million barrels last week, far exceeding expectations of a
3.4-million-barrel rise.
The U.S. government's Energy Information Administration, which
said last week crude stocks hit a record high, releases its
supply report at 10:30 a.m. EST (1530 GMT).
Oil has slid from more than $100 a barrel in mid-2014, pressured
by excess supply and a decision by the Organization of the
Petroleum Exporting Countries to abandon its traditional role of
cutting production alone to boost prices.
OPEC and outside producers have stepped up diplomatic activity
following the slump in prices to their lowest since 2003 last
month, and on Feb. 16 Saudi Arabia, Qatar and Venezuela plus
non-OPEC Russia said they would freeze output.
One stumbling block in attempts to forge a wider agreement is
Iran, which is increasing output following the lifting of
Western sanctions in January and whose oil minister was quoted
on Tuesday as calling the deal "laughable".
And merely not adding more barrels to the market may have little
impact on the excess supply, given that OPEC production is
running at its highest levels in many years and increased
further in January. <OPEC/M> <IEA/M>
"At these levels, even if OPEC members honestly implement a
production freeze deal, it will do little to improve balances in
the coming months," analysts at Energy Aspects said in a report.
(Additional reporting by Henning Gloystein; editing by Jason
Neely)
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