Investing.com - Crude oil prices reversed early gains and fell in Asia early Tuesday, building on a sharp sell-off overnight as prospects for cutbacks in output by major producers appeared to have dimmed.
On the New York Mercantile Exchange, WTI crude for March delivery traded down 0.92% to $31.33 a barrel.
On Tuesday, industry group the American Petroleum Institute will release its estimates of U.S. crude and refined product stocks last week. The U.S. Department of Energy will release more closely-watched figures on the same on Wednesday.
Overnight, U.S. crude futures crashed more than 5% on Monday, erasing most of their gains from last week's rally, as optimism for supply cuts from OPEC faded and soft manufacturing activity in China exacerbated fears of weakening demand in the emerging markets.
On the Intercontinental Exchange (ICE), brent crude for April delivery wavered between $33.93 and $36.24 a barrel, before closing at 34.30, down 1.71 or 4.74% on the session. North Sea brent crude futures also ended a five-day winning streak. Previously, the international benchmark for crude had rallied more than 26% since plunging to its lowest level in more than a decade on Jan. 20.
Crude prices fell precipitously on Monday, amid growing skepticism that a deal between OPEC and non-OPEC producers could be struck to slash output as much as 5% on a daily basis. Last week's surge was inspired by comments from Russia energy minister Alexander Novak that the major oil producer could meet with Saudi Arabia to discuss a strategy to reduce a massive supply glut that persists on global energy markets. The kingdom, though, is reluctant to reduce its daily production below 10 million barrels per day unless the supply cuts are met with proportional declines from its top rivals.
Over the last 20 months, crude futures have fallen by more than 70% from their peak of $115 a barrel two summers ago. At a historic meeting in November, 2014, OPEC rattled global markets with a strategic decision to leave its production ceiling above 30 million bpd. The tactic was purportedly aimed at undercutting high-cost U.S. shale producers, which are forced to limit output when oil prices are cheaper.
Separately, investors reacted to reports of soft manufacturing data in China, after its January Purchasing Manager's Index (PMI) fell by 0.3 to 49.4, dropping to its lowest level since 2012 and its sixth consecutive month in contraction. China, the world's second-largest importer of crude behind the U.S., saw its imports surge to 7.8 million bpd in December, its highest on record.
Also on Monday, reports surfaced from Nigeria that multiple bombings of the Agip oil pipelines have resulted in the loss of approximately 16,000 barrels per day since last Thursday. Nigeria, the sixth-largest producer in OPEC, pumped more than 1.78 million bpd in December.