SINGAPORE, May 5 Oil prices fell by as much as a further 3 percent on Friday, after prices had crashed to five-month lows in the previous session, as concerns about global oversupply wiped out all of the price gains since OPEC's move to cut output.
It took months for Opec and non-members to reach a deal, though oil-producing states started to suffer from ultra-low prices which slumped to 27.26 USA dollars per barrel (£21.07) in January 2016.
Brent crude fell 1.8% at $47.49 a barrel, while U.S. crude dropped 2.1% to $44.58 a barrel.
The slide steepened after the Opec delegates downplayed the chance that their group and other producing countries would deepen their output cuts when they meet on May 25.
WTI Crude is now trading down 5.05 percent at $45.52, with Brent Crude down 4.98 percent at $48.38.
He points out that maintaining of the moratorium allows keeping prices at sufficiently high level - $50-55 a barrel or even approach to $60.
The Reuters news agency, citing OPEC sources, reported on Thursday evening that countries behind the production cuts - including powerhouse producer Saudi Arabia - were unlikely to agree deeper reductions shortly but maintain current pumping levels until the end of the year.
Commodities also declined as China's intensifying clampdown on financial leverage and increased regulatory scrutiny are seen curbing demand in the world's biggest energy consumer.
Both Brent and WTI futures are down about 17% so far this year, despite OPEC efforts to support prices.
"Sustained closes below this levels would be extremely bearish for the long-term".
After falling nearly 5 percent on Thursday, both contracts continued to collapse overnight with WTI falling to $43.76, its lowest since November 15, and Brent down to $46.64, its lowest since November 30 when the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production during the first half of 2017.
Brent for July settlement slumped as much as US$1.74, or 3.6 percent, to US$46.64 a barrel on the London-based ICE Futures Europe. This substantially increases the chances of one or more participants cheating, betraying the objective of the extension, and that's in case everyone even agrees to the extension, which is by no means certain when it comes to non-OPEC producers.
Russia's Energy Minister, Alexander Novak, said in written comments on Thursday that his country is inclined to extend its cuts. But the market continues to question whether continuing the 1.8 million bpd cut will be sufficient to reduce the glut significantly.
A combination of resilient USA shale output and surprisingly sluggish demand for gasoline from American drivers has kept US oil stockpiles at historically high levels.
Prices that "overshot" to the mid-to-high US$50s after the output deal are now "back to reality" amid surging USA supplies, Shum said.