Oil futures extended losses into a third session in Asian trade on Wednesday, as U.S. crude stocks last week surged to more than half a billion barrels and as Iran plans to boost exports from March.
Brent for April delivery LCOc1 had dropped 24 cents to $32.48 a barrel as of 0524 GMT, after settling down $1.52, or 4.4 percent.
U.S. crude, also known as West Texas Intermediate (WTI) CLc1, fell 22 cents to $29.66, having ended the previous session down $1.74, or 5.5 percent.
“Oil prices are coming off again. Prices are going to zig-zag for a while,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
U.S. crude stocks rose by 3.8 million barrels to 500.4 million in the week to Jan. 29, data from industry group, the American Petroleum Institute, showed on Tuesday.
Weekly inventory data from the U.S. government’s Energy Information Agency is due on Wednesday.
“The (global) inventory situation is going to get worse in the second quarter as we hit the peak refining rate at the end of this quarter,” Nunan said.
“(But) this has been so well documented that it’s been built into prices. I do think we’re close to the bottom and the bottom in prices will be this quarter.”
Nunan forecast Brent would trade in a $25-$35 a barrel range in the first quarter, before slowly recovering over the rest of the year.
A rebalancing between oil demand and supply will not come until mid-2017, Morgan Stanley said in a note on Wednesday.
Implied crude stocks are set to climb by 1.1 million barrels per day this year, compared with an implied stock build of 1.3 million bpd last year, the note said.
“Despite the myriad announcements of capex cuts, production has yet to respond enough to rebalance the market,” Morgan Stanley said.
Production numbers from Canada, Brazil and Russia all grew last year, with Russian output in December hitting the highest level since the 1980s, the note said.
The increase in stocks at Cushing has led to renewed fears of overflowing oil tanks at the key U.S. storage hub, causing the spread between prompt and forward U.S. crude oil futures to slump to an 11-month low, stoking fears of a further price rout.
Meanwhile, Iran is aiming for crude exports of 2.3 million barrels per day in the fiscal year beginning March 21, the managing director of the National Iranian Oil Company was quoted as saying on Tuesday.
That is higher than the 1.44 million bpd Iran is expected to export in February and 1.5 million bpd in January, according to data on Iran’s preliminary tanker loading schedules.
South Korea, which imported 5.7 million tonnes of crude from Iran last year, unveiled a set of stimulus measures on Wednesday.
(Reporting by Keith Wallis; Editing by Joseph Radford)