Oil traded near one-month lows on Tuesday after a surprise fall in gasoline demand in the United States, the world’s largest oil consumer, and on doubts whether oil producers can agree an output freeze to dampen a global supply glut.
US gasoline demand, one of the strongest pillars supporting oil consumption, fell in January for the first time in 14 months, US Energy Information Administration data showed, Reuters reported.
Brent crude, the global oil price benchmark, was down 27 cents at $37.42 a barrel on Tuesday, close to a one-month low. US futures fell by 28 cents to $35.42.
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.
“The market was surprised by two figures: Russian production at a 30-year high and US gasoline demand dropping for the first time in 14 months,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
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.
Bjarne Schieldrop, chief commodities analyst at SEB, said that Brent futures could drop to $35 a barrel in the sell-off.
“We view this as a good opportunity to go long into Q2/Q3 ... Brent crude oil is likely to move until proven wrong,” he wrote in a report.
Nawal Al-Fuzaia, Kuwait’s representative at OPEC 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.
