Oil falls on mild winter weather and rising supply concern

Oil fell yesterday, with US crude briefly slipping below $30, dented by worries about demand amid a mild winter and concerns of rising supply as hopes for a deal between the Organization of the Petroleum Exporting Countries and Russia on output cuts fade.

Brent Crude for April delivery was down $1.09 at $33.15 a barrel at one stage in Europe yesterday, after touching a low of $32.23, down 5.9%, in the session.

The oil market had rallied for four straight days last week after Russia’s energy minister said Opec kingpin Saudi Arabia suggested a production cut to tackle one of the worst supply gluts in history.

Industry watchers have been sceptical of a deal, particularly as Iran looks to boost production and market share after the lifting of sanctions.

Goldman Sachs said it was “highly unlikely” that Opec would co-operate with Russia to cut output, saying such a move would also be self-defeating, as stronger prices would bring previously shelved production back to the market.

Goldman and others have said oil could slip below $30 as the market tries to rebalance itself.