Oil extended losses for the second day in a row after Saudi Arabia said that it will not pursue other nations calls for oil output cuts. This statement along with a report of increased crude reserves in the U.S. dragged the commodity down below $31 per barrel.

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Nothing Beyond Freeze

Saudi Oil Minister Ali al-Naimi said that an oil output cut possibility is unlikely though more countries have agreed to lock oil output at January levels. While analyzing the statement, PVM broker David Hufton said that the comment has poured cold water on the oil rally, which was largely unexplained. However, the market has now turned clearly bearish again, leading to a sharp retreat in oil prices.

West Texas Intermediate fell 2.98% to $30.92 today while, Brent Crude for April delivery is trading around $32.61, down by 1.98%.

Iran Calls Idea “Laughable”

Another reason contributing to the renewed decline is a report from the American Petroleum Institute (API), which posted an update on crude stockpiles in the U.S., stating that inventories went up by 7.1 million barrels during last week. The number came in much higher expectations of 3.4 million barrel rise. Following this report, the market will turn to the official report from the Energy Information Administration (EIA), which is due to release later today.

Apart from this, Iran has played its part in distressing the outlook on oil after its oil minister called Russian and Saudi Arabia efforts to freeze output as “laughable”. Though the market already had a hunch that Iran might not part take in oil output cuts, its recent statement has only confirmed those projections.

According to analysts at Energy Aspects, the output freeze alone will not help stabilize oil markets. The research firm said that the current levels are way too high to make any difference in oil markets following the production freeze.

The iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) traded 3.44% down to $4.62 during the previous session.