Investing.com - Oil prices declined in North America trade on Tuesday, reversing earlier gains after the International Energy Agency said the global crude surplus will be bigger than previously estimated in the first half of 2016.
The surplus of supply over demand at the start of the year is "even greater" than initially expected, the International Energy Agency said in its latest monthly report.
Supply may exceed consumption by an average of 1.75 million barrels per day in the first half of 2016, compared with last month’s estimate of 1.5 million, and the excess could swell if OPEC members bolster production.
"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 organization said.
Crude oil for delivery in March on the New York Mercantile Exchange retreated 32 cents, or 1.06%, to $29.38 a barrel by 13:45GMT, or 8:45AM ET, after rising by as much as 3% earlier to $30.61.
On Monday, New York-traded oil futures collapsed $1.20, or 3.88%, as hopes of a deal between OPEC and non-OPEC producers to cut output continued to fade.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 4.0 million barrels in the week ended February 5.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery slumped 39 cents, or 1.19%, to trade at $32.49 a barrel. A day earlier, London-traded Brent lost $1.18, or 3.46%, amid ongoing concerns over a global supply glut.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.
Oversupply issues will be exacerbated further as Iranian exports return to the global oil market.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $3.11, compared to a gap of $3.19 by close of trade on Monday.