Brent falls towards $58 a barrel

Brent fell towards $58 a barrel on Tuesday, extending the 2-percent loss in the previous session, as oversupply fears lingered, overshadowing any optimism on the outlook for the global economy.

The oil benchmark had traded above $59 in early Asian trade before negative sentiment overtook, dragging prices 7-percentoff its near two-month peak reached last Tuesday.

Brent fell 58 cents to $58.32 a barrel by 07:04 GMT,while U.S. WTI crude was down 60 cents at $48.85.

U.S. crude stocks are expected to have increased by 4 million barrels to a record high in the week ending Feb. 20, a preliminary Reuters survey showed on Monday.

Refinery woes weighed on crude prices. The largest U.S. refinery strike in 35 years affecting 12refineries that account for a fifth of national production capacity continued into its fourth week, and talks to end the strike are not expected to resume this week.

“The spreads for crude oil are becoming severely altered by the refinery strikes. For the WTI-Brent spread, with a lower capacity to refine crude oil, WTI remains in excess in the market compared to Brent. This causes the spread to widen,” Phillip Futures analysts said in a note on Tuesday.

The price difference between Brent and WTI stood at $9.41 a barrel at 0709 GMT, after hitting $10.27 on Monday, the widest since March 2014.

However, hopes that the global economy is on the path of recovery limited losses. Investors are now waiting for economic data from Europe and the United States later on Tuesday,including numbers on German GDP and U.S. consumer confidence, for trading cues.

“The US economy looks exceptionally strong, the euro zone is showing its first signs of recovery, and lower global oil prices are boosting demand,” the Economist Intelligence Unit said in a note on Tuesday.

German business morale inched up to a seven-month high in February, the Ifo index showed on Monday.

“People are starting to get a sense of economic recovery and that’s providing a bit of support and an underlying stream of confidence,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

Crude rose briefly on Monday when the Financial Times cited Nigeria’s oil minister as saying the country would call an OPEC extraordinary meeting if prices dropped further. But lingering doubts stemming from key Gulf OPEC members’ resistance to curb production pared gains.