US oil prices slipped towards $34 a barrel on Wednesday, extending Tuesday's nearly 7 per cent losses on renewed economy concerns, slumping demand and bloated inventories.
US crude for March delivery fell 17 cents to $34.76 a barrel at 1233 GMT, while London Brent crude for April delivery rose 48 cents to $41.51 a barrel.
With March's WTI contract to expire on Friday, the April contract's premium narrowed to around $3.60 on Wednesday versus nearly $8 last week, a sign traders believe swollen inventories in Cushing, Oklahoma may persist.
Traders said Brent crude futures in 2009 are trading within a $40-$50 a barrel range because Opec supply cuts have helped support the price in spite of slackening demand.
"Certainly it's continuing gloom for demand, but OPEC's reining in its cut is holding Brent in a sideways range," said Christopher Bellew, broker at Bache Commodities in London.
The Organization of Petroleum Exporting Countries, a supplier of more that a third of the world's oil, has struggled to corral its member states into cutting up to 4.2 million bpd since September to prop up prices.
Earlier this month the producer cartel said its members had delayed 35 new projects due to low prices and the slowdown in demand, and some Opec countries have raised the prospect of another supply cut at their next meeting in Vienna on March 15.
The US Energy Information Administration will release its weekly inventory data report on Thursday, but a Reuters poll of analysts on Tuesday showed an average forecast for an increase of 2.6 million barrels, nearing an 11-year high.
US auto makers unveiled new survival plans seeking billions of dollars in extra government funds on Tuesday, drawing sceptical responses and investor doubts about a return to profitability.
Analysts said the bailout request and Obama administration plans to help homeowners would weigh on crude on Wednesday.
"We look for increased volatility in all markets during Wednesday's session...of the two, the focus will be more on Detroit," Edward Meir of MF Global wrote in a note.
The news across Asia has been almost uniformly bad, with Japan, the world's second-largest economy, reeling from its worst downturn in a generation. The Nikkei stock average fell 1.5 per cent to its lowest close in nearly four months.
The financial crisis has left much of the world in recession and hammered oil consumption, pulling crude prices from record highs above $147 a barrel hit in July.
Traders will also watch for data on US housing starts and January industrial production, as well as the Redbook retail sales index for February to look for new indications on the health of the world's top economy.