U.S. oil falls on China economic woes, rising OPEC supply

By Keith Wallis
SINGAPORE, Feb 2 (Reuters) - U.S. crude fell for a second
session in early Asian trade on Tuesday as worries about the
economic health of top energy consumer China and rising oil
supply weighed on markets.
The front month contract for West Texas Intermediate (WTI)
CLc1 was down 28 cents at $31.34 as 0010 GMT after falling $2,
or 5.9 percent, in the previous session.
The benchmark at one point posted its biggest daily loss in
five months on Monday, dropping 6.9 percent to an intraday low
of $31.29 although that was still nearly 20 percent above the
more than 12-year low of $26.19 hit in mid-January.
Crude prices fell after China's purchasing managers index
dropped to a three-year low in January, coupled with rising oil
supplies, ANZ said in a note on Tuesday.
"Rising supply also suggests further downside risk to
short-term prices. Output from OPEC rose to 33.1 million barrels
per day last month as Indonesia's membership to the group was
reactivated," the note added.
Investors are waiting on economic data from the Eurozone,
including unemployment figures and producer prices, later on
Tuesday to give oil markets further direction.
That came as U.S. commercial crude oil inventories likely
rose by 4.7 million barrels last week to a new record high of
499.6 million barrels, a preliminary Reuters survey taken ahead
of industry and official data showed on Monday.
Gasoline stocks likely rose 1.3 million barrels last week,
while distillate inventories, which include heating oil and
diesel fuel, were seen falling 1.7 million barrels.
The Reuters poll was taken ahead of weekly inventory reports
from industry group the American Petroleum Institute (API), due
out later on Tuesday, and the U.S. Department of Energy's Energy
Information Administration (EIA), due for release on Wednesday.
Russian Energy Minister Alexander Novak and Venezuelan Oil
Minister Eulogio Del Pino discussed the possibility of holding
joint consultations between OPEC and non-OPEC countries in the
near future, the Russian Energy Ministry said on Monday.

But Goldman Sachs (N:GS) said on Monday it was "highly unlikely"
OPEC producers would co-operate with Russia to cut oil output,
while also being self-defeating as stronger prices would bring
previously shelved production back onto the market.
That came as production from Iraq's southern oil fields
dropped to an average of 3.9 million barrels per day (bpd) in
January from a record 4.13 million bpd the previous month, the
oil ministry said on Monday.