Oil prices slid by up to 2 percent in Asian trade on Friday, adding to overnight declines, on worries that refineries will take time to resume operations after the big freeze in southern parts of the United States, creating a gap in demand.
Investors were also concerned that supplies by the Organization of Petroleum Exporting Countries and its allies (OPEC+) were expected to rise.
“The market was ripe for a correction and signs of the power and overall energy situation starting to normalise in Texas provided the necessary trigger,” said Vandana Hari, the founder and CEO of research firm Vanda Insights.
US West Texas Intermediate (WTI) crude futures fell $1.14, or 1.9 percent, to $59.38 a barrel at 04:21 GMT, after declining 1 percent on Thursday.
Brent crude futures dropped $1.03, or 1.6 percent, to $62.90 a barrel, after declining 0.6 percent on Thursday.
Both benchmark contracts rallied to 13-month highs on Thursday driven by the historic freeze in southern states in the US. While analysts estimate the extreme cold has shut in as much as one-third of US crude production, attention has now turned to the effect of the big freeze on refiners.
The lack of demand from Texan refiners will likely lead to a build-up in crude stocks over coming weeks, even though about 3.5 million barrels per day (bpd) of US crude oil production has been shut, ANZ Research said in a note.