SINGAPORE: World oil prices extended losses in Asia Tuesday on weak economic data from top energy consumer China and realisation that a hoped for deal among producers to cut output would not happen.
Prices had been given a boost late last month by speculation that Russia and members of the Organization of the Petroleum Exporting Countries would reach agreement to slash output in the oversupplied petroleum market.
But the upward momentum hit a snag after traders became increasingly sceptical about such a deal, and the latest news that manufacturing activity in China contracted at its fastest pace in more than three years in January dealt a further blow to sentiment.
US benchmark West Texas Intermediate for delivery in March was down 50 cents, or 1.58 percent, at $31.12 and Brent crude for April dipped 45 cents, or 1.31 percent, to $33.79 a barrel by 0320 GMT. Both contracts settled lower on Monday.
The rise in oil prices last month "was based on shaky foundations, namely hopes that Russia and OPEC would agree to cut output," Capital Economics said in a market commentary.
"We doubt that there will be any coordinated agreement even though the market remains oversupplied. Meanwhile, US inventories of both crude oil and gasoline have continued to build over the last month. Indeed, US crude oil stocks are now at record highs."
Oil has lost around 70 percent of its value since June 2014 as supplies piled up and demand was not strong enough to soak up the barrels due to a global economic slowdown led by China, the world's second biggest economy and top energy consuming nation.
Government data released in Beijing on Monday showed China's Purchasing Managers' Index (PMI), which tracks activity in factories and workshops, fell to 49.4, the lowest figure since 49.2 in August 2012, and was below market expectations.
PMI readings above 50 signal expanding activity, while anything below indicates shrinkage.
"Global economic growth remained lacklustre at the start of this year," Dutch bank ABN-AMRO said in a note.
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