United States crude futures plumb 12-year lows

IEA monthly reports showed that the worldwide inventory build looks set to continue for most of the year because it will take time for USA oil production to decline and an agreement between OPEC and other producer countries to cut supply is unlikely.

And after crude futures had slumped by almost three-quarters since mid-2014, French oil company Total said it had cut its investment target this year by up to $2.0 billion (1.8 billion euros).

Oil resumed heavy falls today, erasing earlier gains in highly volatile trade, after the International Energy Agency issued a gloomy market outlook.

Analysts said they saw little chance of OPEC and non-OPEC producers agreeing on a common policy and that low prices as a result of oversupply would likely persist.

Opec cited factors including the financial strain on producers dependent on oil income, the inability of central banks to lower interest rates and impacts on sectors from manufacturing to agriculture.

There seemed to be no sign the OPEC members are cutting their oil output to rebalance the market.

The development came after United Arab Emirates oil minister Suhail Al Mazrouei reportedly said the Organization of the Petroleum Exporting Countries was willing to cooperate with other oil producers on trimming oil output.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $26.37 per barrel, down $1.08 and not far off the $26.19 intraday low hit in January that was their weakest price since 2003.

Commenting on reports that OPEC members were discussing the possibility of collaborative production cuts with non-OPEC members, the IEA said the likelihood of coordinated cuts “is very low”.

“According to secondary sources, total OPEC crude oil production in January averaged 32.33 mb/d, an increase of 131 tb/d over the previous month”, OPEC said in its oil market report released on Wednesday. The implication of the stockpile essentially means supply outweighs demand hence, a drop in price of oil.

Phillip Futures analyst Daniel Ang also said Wednesday s price rebound was helped by the reopening of some regional markets after the Chinese New Year break. Top Opec exporter Saudi Arabia told Opec it increased production to 10.23 million bpd from 10.14 million bpd in December.