Oil slid this week on waning prospects of an output freeze by producers to tackle a supply glut that shows no signs of ending as US crude inventories hit record heights.
After winning some support from a weaker dollar that made crude priced in the US unit cheaper for holders of rival currencies, oil prices slumped today following comments out of Saudi Arabia.
"The suggestion that Saudi Arabia will not freeze oil production if Iran doesn't do the same, coupled with a stronger dollar, has taken a sledge hammer" to prices, said Jasper Lawler, an analyst at traders CMC Markets.
Around 1630 GMT, US benchmark West Texas Intermediate for delivery in May was down USD 1.41 at USD 36.93 a barrel compared with yesterday's close.
Brent North Sea crude for June delivery shed USD 1.57 to USD 38.76 a barrel.
Both contracts were down also compared with one week earlier.
Bloomberg News today reported that according to Saudi Arabia's deputy crown prince, the kingdom should freeze its oil output only if mirrored by Iran and other major crude producers.
"If all countries agree to freeze production, we're ready," Mohammed bin Salman said in an interview.
Major oil producers led by Russia and Saudi Arabia will meet on April 17 in Doha to discuss measures to stabilise prices, including a proposal not to pump out oil above a certain level.
Oil prices are being hit in part owing to the return of Iranian crude to world markets after years of economic sanctions on Tehran were lifted following a nuclear deal last year.
Official data released Wednesday meanwhile showed that US commercial crude inventories climbed to a fresh record high last week, further underscoring concerns about a market brimming with supplies and not enough demand.
Shailaja Nair, senior managing editor at global energy information provider Platts, said "unchanged fundamentals" of supply and demand remain a key influence on market sentiment.
"The market is still oversupplied with crude, demand is still the same, we're not seeing any rise in demand. Nor is there any possibility of any rise in demand in the near term," she told AFP.
But Nair said only a decision to cut production rather than an output freeze will boost prices.
"Considering the amount of crude already in the market, a freeze is not going to make much of a difference," she said.
Markets watchers tracked also closely the currency markets this week.
The greenback tumbled after Federal Reserve chief Janet Yellen trod a cautious line about the outlook for the global economy and indicated that US interest rates were unlikely to rise before June.
