This is while investors waited for US inventory data to assess demand in the world’s top oil consumer.
Crude prices on both sides of the Atlantic tumbled nearly 2 per cent on Tuesday after Libyan rebels said they would re-open vital oil ports within days, while poor manufacturing data from China and Europe weighed on the outlook for fuel demand.
Brent crude had inched down 4 cents to 105.58 US dollars a barrel by 0620 GMT, after settling at its lowest since November 11. US crude edged down 18 cents to 99.56 US dollars a barrel, after a 1.8 per cent drop in the previous session.
“The market needed to correct after strong gains since mid-March,” said Ken Hasegawa, a commodity sales manager at Newedge Japan. “It’s possible that Libyan exports triggered a sell-off.”
A rebel group in eastern Libya has agreed with the government to end its seizure of vital oil ports, a senior leader told Reuters, raising hopes for an end to an eight-month stalemate that has dried up state income.
Surveys showing factories across Europe eased back on the throttle in March and China’s vast manufacturing industry contracted for a third straight month also kept a lid on oil price gains.
But estimates for a drop in supply from the Organization of the Petroleum Exporting Countries (OPEC) underpinned investor sentiment.
A Reuters’ survey showed OPEC’s oil output fell in March to its lowest since December as Iraq’s oil revival suffered a setback and outages cut output in African producers.
The market is now eyeing oil inventory data due later in the day from the US Energy Information Administration (EIA) for more trading cues.
“If the upcoming EIA weekly release were to reveal lower crude inventories consistent with the API data, we are likely to expect prices to retrace upwards above 100 US dollars,” Phillips Futures analyst Tan Chee Tat said in a note.
Data on Tuesday from industry group the American Petroleum Institute (API) showed crude stocks dropped 5.8 million barrels in the week to March 28 to 373.5 million barrels, compared with analyst expectations for an increase of 1.1 million barrels.
Crude stocks at the Cushing, Oklahoma, and delivery hub fell by 1.5 million barrels, API said. Gasoline inventories increased and distillate stocks fell, it added.
Newedge’s Hasegawa said oil would stay range bound ahead of key jobs data from the United States this Friday.
“Brent’s range will have a floor at 105 US dollars and could possibly rebound,” said Hasegawa, adding that US crude could stay between 97 US dollars and 103 US dollars.
Geopolitical tensions between Russia and the west over Ukraine simmered, although analysts and traders expect the crisis to have less impact on oil supplies than natural gas.