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(Bloomberg) — Oil extended declines from the lowest close in more than 12 years before U.S. government data forecast to show crude supplies expanded, exacerbating a global glut.
Futures fell as much as 1 percent in New York after slipping 5.3 percent Monday. Stockpiles probably rose by 2 million barrels last week, a Bloomberg survey showed before a report from the Energy Information Administration Wednesday. Iran will begin selling a new grade of crude as soon as March as it prepares to boost production once international sanctions blocking oil exports are lifted.
“When you have a supply overhang, there’s going to be continued downward pressure on prices,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Investors are looking toward a difficult few months for oil, especially with Iran set to boost exports. We are likely to see production cuts at these prices, but they may take some months to come through.”
Oil slid more than 10 percent last week as volatility in Chinese markets fueled a rout in global equities and U.S. supplies remained about 100 million barrels above the five-year average. Brent crude, the global benchmark, may trade in the $20s if the dollar rapidly gains, according to Morgan Stanley.
West Texas Intermediate for February delivery fell as much as 31 cents to $31.10 a barrel on the New York Mercantile Exchange and was at $31.19 at 9:18 a.m. Hong Kong time . The contract dropped $1.75 to $31.41 on Monday, the lowest close since December 2003. Total volume traded was about 25 percent below the 100-day average. Prices lost 30 percent last year.
Brent for February settlement lost as much as 23 cents, or 0.7 percent, to $31.32 a barrel on the London-based ICE Futures Europe exchange. The contract declined $2, or 6 percent, to $31.55 Monday, the lowest close since April 2004. The European benchmark crude was at a premium of 19 cents to WTI.

To contact the reporter on this story: Ben Sharples in Hong Kong at bsharples@bloomberg.net To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net