Oil extended its decline from the lowest close in more than 12 years before weekly US government data forecast to show crude stockpiles expanded, exacerbating a global glut.
Futures lost as much as 3.7 per cent in New York after falling 3.3 per cent Tuesday to the lowest since September 2003.
US oil fell towards $27 a barrel and its lowest since 2003, on worries about global oversupply.
Inventories probably increased by 2.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration Thursday.
Markets could "drown in oversupply," sending prices even lower as demand growth slows and Iran boosts exports, according to the International Energy Agency.
“The outlook for the oil market is pretty negative at the moment,” Angus Nicholson, an analyst at IG in Melbourne, said by phone.
“Iran is adding to the concerns. Once the market does get a gauge on Iran’s potential, there will probably be less uncertainty affecting the market.”
Crude is down 26 per cent this year amid volatility in Chinese markets and speculation the removal of restrictions that capped Iran’s oil sales will help to prolong a worldwide oversupply.
Energy producers led declines in Asia as the MSCI Asia Pacific Index lost 2.8 per cent in Hong Kong, heading for the lowest close since September 2012.
West Texas Intermediate for February delivery, which expires Wednesday, fell as much as $1.04 to $27.42 a barrel on the New York Mercantile Exchange and was at $27.49 at 7.56 am London time.
Monday’s transactions were booked with Tuesday’s because of the Martin Luther King Jr. holiday.
The more-active March future slid 90 cents to $28.67. Oil Supplies Brent for March settlement lost as much as 72 cents, or 2.5 per cent, to $28.04 a barrel on the London-based ICE Futures Europe exchange. The contract rose 21 cents to $28.76 Tuesday.
The European benchmark crude traded at a discount of 55 cents to WTI for March. US crude stockpiles were about 100 million barrels above the five-year seasonal average at the end of 2015, according to EIA data.
Bloomberg
