Oil futures weakened Tuesday as the likelihood of an OPEC-led production cut diminished further, with NYMEX crude back under $30/b ahead of weekly US inventory reports expected to show a build.
NYMEX March crude settled $1.74 lower at $29.88/b. ICE April Brent settled down $1.52 at $32.72/b.
In refined product action, NYMEX March ULSD settled 2.56 cents lower at $1.0109/gal, while NYMEX March RBOB settled down 8.22 cents at $1.0008/gal.
Venezuela's oil minister, Eulogio Del Pino, is visiting key oil producers to discuss ways of stabilizing oil prices.
Del Pino will meet with Iranian Oil Minister Bijan Zanganeh on Wednesday in Tehran, followed by stops in Qatar and Saudi Arabia, with the aim of coordinating a meeting between OPEC and non-OPEC producers in February.
The Venezuelan oil minister was in Moscow on Monday for talks with Russian Energy Minister Alexander Novak, but failed to yield any clear plan to reduce output, Citi Futures and OTC Clearing analyst Tim Evans said in a note.
"Some interest in further dialogue remains, but there was no clear overture that could help convince Saudi Arabia to shift its position."
Oil futures rallied last week on speculation that OPEC and Russia would meet this month to discuss a 5% production cut.
"We're continuing to adjust from last week's false enthusiasm," said Dominick Chirichella, partner at Energy Management Institute.
"The level of complexity to put a meeting together is enormous, especially when Iran is saying that it's not interested and given Russia's track record from the late [1990s], when it agreed to cut and increased output instead."
Any effort to lower output would represent a policy shift away from boosting output to compensate for lower oil prices.
Russia's crude oil and condensate output hit a new record high of 10.878 million b/d in January, according to data released Tuesday by the Central Dispatching Unit, the statistical arm of the energy ministry.
It was the fourth straight monthly record high, after December volume of 10.82 million b/d beat the previous record of 10.779 million b/d in November and 10.776 million b/d set in October.
"Yet, Russia may well end up losing some output given the significant drop in investment that is likely to lead to a step-up in decline rates at existing fields, and possible project delays," Energy Aspects said in a note.
ExxonMobil said Tuesday that its 2016 capital expenditure budget will drop 25% from 2015 to $23.2 billion.
The oil major plans on reining in spending this year after its fourth-quarter profit fell 58% in what CEO Rex Tillerson called a "challenging environment" of low oil prices.
ExxonMobil's capital expenditures peaked in 2013 at $42.5 billion.
COLONIAL RESTARTS LINE 2
Refined product futures were under pressure Tuesday after Colonial Pipeline restarted Line 2 less than 24 hours after closing it and Line 1 to investigate an integrity issue, the company said.
Colonial restarted Line 1 Monday. Lines 1 and 2 carry refined products from Pasadena, Texas, to Greensboro, North Carolina, at which point they combine with Line 3, which ends in Linden, New Jersey.
In the physical market, Colonial Pipeline pricing for line space for delivery from Pasadena, Texas, to Greensboro, North Carolina, was stronger, reflecting renewed interest in shipments along 1.37 million b/d Line 1.
Line space for the pipeline's 9th cycle, with deliveries scheduling next Monday, rose 1.75 cents to 6 cents in trade early Tuesday.
US Gulf Coast gasoline prices also recovered Tuesday morning from a day earlier, when sellers scrambled to find buyers after Colonial halted gasoline shipments.
Benchmark Gulf Coast CBOB at 13.5 RVP for lifting February 16 at Pasadena rose about 6 cents to a heard bid/offer range of NYMEX March RBOB minus 13 cents/gal to minus 12.5 cents/gal.
Benchmark conventional gasoline at 13.5 RVP, which ships in much lower volumes than CBOB, rose about 6 cents and was trading around NYMEX March RBOB minus 9 cents/gal.
Outside the issues related to the Colonial Pipeline, refined products still face tough market conditions, according to a Tuesday note by Virginia-based fuel supplier Papco.
"Moderating East Coast temperatures this week and an expected bearish inventory report should help contain any real advance in products," Papco said in a note.
Analysts surveyed Monday expected US inventory data to show crude stocks built 3 million barrels in the week ended Friday, January 29, on the back of lower refinery utilization rates.
Despite less refinery activity, gasoline stocks are expected to have increased 1.5 million barrels last week.
"I think you will see the full impact of the winter storm in this report because no one could drive in New York for a couple of days and throughout the East Coast," Price Futures Group analyst Phil Flynn said.
A snowstorm blanked the Atlantic Coast the weekend of January 23. The US Energy Information Administration said crude inventories rose to 494.92 million barrels in the week to January 22, the highest since at least April 1982, the earliest data on the EIA website showed.
The American Petroleum Institute will release US commercial inventory data at 2130 GMT Tuesday, and the EIA will release its official data at 1530 GMT Wednesday.
