Oil resumed heavy falls today, erasing earlier gains in highly volatile trade, after the International Energy Agency issued a gloomy market outlook.
In late afternoon deals in London, Brent North Sea crude for delivery in April dived USD 2.25 to USD 30.63 per barrel.
US benchmark West Texas Intermediate for March delivery shed USD 1.07 to USD 28.62 a barrel compared with yesterday's close.
Oil had already crashed in January, with New York crude ducking below USD 28 for the first time since September 2003 on abundant crude supplies and global economic gloom centred on China's slowdown.
"Oil is falling on continued worries about excessive supply as the odds of an output cut from Russia and OPEC are fading fast," City Index analyst Fawad Razaqzada told AFP today.
Prices had tanked yesterday after weekend talks between OPEC kingpin Saudi Arabia and fellow cartel member Venezuela dashed hopes for a reduction in world production.
Today, the market dived once again after the IEA forecast the global oil surplus would be larger than previously expected in the first half of 2016.
"The IEA now envisages that supply may exceed demand by an average of 1.75 million barrels a day in the first half of this year, compared with an estimate of 1.5 million last month," added Razaqzada.
"The IEA, like many other forecasters, think that the excess could grow if output from the OPEC increases further, a probable outcome given that Iran is now in the process of making a full return to oil the market."
The energy watchdog also played down talk of a global output cut, warning that the supply glut would prevent any short-term price rebound.
"With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term," the Paris-based IEA said in its monthly report.
"In these conditions the short term risk to the downside (for prices) has increased," added the watchdog that advises countries on energy policy.
Late last month, prices had rallied on speculation that Russia -- the largest global oil producer -- and the 12-nation OPEC cartel could discuss coordinated output cutbacks.
However today, the IEA poured more cold water on the prospect of a potential agreement.
"Persistent speculation about a deal between OPEC and leading non-OPEC producers to cut output appears to be just that: speculation," the IEA said.
