Brent for April delivery LCOc1 had dropped 66 cents to $33.58 a barrel as of 0502 GMT, after settling down $1.75, or 4.9 percent, in the previous session.

The front month contract for West Texas Intermediate (WTI) CLc1 was down 71 cents at $30.91 after falling $2.00, or 5.9 percent, the session before.

Despite the declines, U.S. crude is still nearly 19 percent above the more than 12-year low of $26.19 hit in mid-January.

The fall in oil prices reflected the general negative sentiment in the Asia time zone, said Ric Spooner, chief market analyst at Sydney's CMC Markets.

"Stocks markets are down; oil is weakening. It all points towards negative risk sentiment across the board," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down almost 0.9 percent, while Japan's Nikkei .N225 slipped 0.6 percent.

The dollar index .DXY also slipped.

"(Prices) have just come back to reality a bit, although they are holding water above $30 a barrel," said Ben Le Brun, market analyst at Sydney's OptionsXpress, pointing to concern over rising oil supplies and weaker economic data.

Oil prices could nudge below $30 a barrel again if investors saw hopes fading of a deal between members of oil producers cartel OPEC and Russia on production cuts, he said.

Russia's energy minister and Venezuela's oil minister 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 said it was "highly unlikely" OPEC producers would co-operate with Russia to cut output, while also being self-defeating as stronger prices would bring previously shelved production back to the market.

Crude prices fell after China's purchasing managers index dropped to a three-year low in January, coupled with climbing 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 a slew of economic data, including U.S. non-farm payroll and unemployment figures and producer prices from the euro zone, to give oil markets further direction, Le Brun added.

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.

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.

 

(Reuters)