NEW YORK Oil prices fell almost 3 percent on Tuesday as equity markets remained weak and forecasts of swelling record high U.S. crude stockpiles faced expectations that global demand will not grow quickly enough to erase the overhang of crude any time soon.
U.S. gasoline futures fell to a 2008 low ahead of the American Petroleum Institute's (API) weekly inventory report, which comes before Wednesday's official stockpile numbers from the U.S. government's Energy Information Administration (EIA).
Wall Street's key equity index, Standard & Poors 500, was down 0.2 percent by 11:35 a.m. EST (1635 GMT) after falling more than 1 percent over the past two sessions.
The dollar tumbled to a four-month low but that did not do much for oil prices which usually get a boost from the currency's depreciation versus the euro and others. [USD/]
"For now, the oil market for today is keeping a continued and close watch on equities after yesterday's schizophrenic action, and awaiting the API numbers," said David Thompson, executive vice-president at Powerhouse, a commodities-focused brokerage in Washington.
Brent crude was down 93 cents, or 2.8 percent, at $31.95 a barrel.
U.S. crude fell 26 cents to $29.43.
Gasoline fell almost 4 percent to around 92 cents per gallon.
U.S. crude stockpiles likely rose 3.9 million barrels in the week ended Feb. 5, said a Reuters survey taken ahead of the API data due at 4:30 p.m. (2130 GMT).
In the previous week to Jan. 29, U.S. crude inventories hit record highs of nearly 503 million barrels
The International Energy Agency (IEA) said it did not expect global demand for oil to grow quickly enough to erase the overhang of crude any time soon.
The world will store unwanted oil for most of 2016 as declines in U.S. output take time and OPEC is unlikely to cut a deal with other producers to reduce ballooning output, said the energy watchdog.
The agency cut its forecast for 2016 oil demand growth, which now stands at 1.17 million barrels per day (bpd) following a five-year high of 1.6 million in 2015, and reduced its estimate of demand for OPEC crude.
Oil traders are even more bearish.
The world's largest trader, Vitol, said it expects global oil demand to grow by around 1 million bpd this year, down from last year's rate 1.6 million bpd.
"I don't think we can rely on low prices driving much incremental demand at this point," Vitol executive member Chris Bake said at an IP Week conference.
(Additional reporting by Amanda Cooper in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy)
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Updated Date: Feb 09, 2016 23:15 PM