U.S. oil prices slipped Tuesday, snapping a three-day streak of gains, as traders weighed a currently oversupplied market against expectations supply growth will slow by the end of the year.
U.S. oil for March delivery fell $1.76, or 3.3%, to $51.10 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, slid 79 cents, or 1.4%, to $57.55 a barrel on ICE Futures Europe.
Oil prices lost half of their value in 2014 and continued falling in January as rapid supply growth overwhelmed moderate demand. The Organization of the Petroleum Exporting Countries opted not to cut output, further weighing on prices.
Analysts say the market is still oversupplied, and some expect prices to fall to new lows as refiners enter seasonal maintenance, lowering demand for crude oil, and global inventories continue to grow.
The increase in world-wide stockpiles will be “quite dramatic” in the coming months, keeping prices in check, said Ian Taylor, chief executive of oil-trading firm Vitol in London Tuesday.
In the U.S., crude-oil supplies have climbed to their highest levels in about 80 years.
A drop in China’s inflation to a five-year low also pressured oil prices Tuesday. The data indicated slow growth in the world’s second-largest oil-consuming nation.
Oil prices have risen in recent days as investors have looked past near-term bearish signals to focus on signs that supply and demand could come into balance by the end of the year.
The International Energy Agency on Tuesday forecast that U.S. production growth will “grind to a halt” in the second half of 2015, and OPEC raised its estimate for demand for its own oil this year.
The U.S. Energy Information Administration will release its outlook for global supply and demand later Tuesday.
Gasoline futures fell 1.88 cents, or 1.2%, to $1.5594 a gallon. Diesel futures slipped 2.19 cents, or 1.2%, to $1.8510 a gallon.
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