Oil prices were down as much as 3.8 percent on Monday as supply overhang concerns grew after a Saudi-Venezuela meeting at the weekend showed few signs of coordination to boost prices.
No tangible signs emerged from a meeting on Sunday between Saudi Arabia's oil minister Ali al-Naimi and his Venezuelan counterpart that OPEC and non-OPEC suppliers were ready to meet to discuss the price slump.
After a flurry of diplomacy over the last two weeks about a possible production cut roiled oil markets, Sunday's meeting between cash-strapped Venezuela and the kingpin of the Organization of the Petroleum Exporting Countries was seen as "make or break" for a possible deal to boost prices that have slumped 70 percent since mid-2014.
Venezuela's oil minister Eulogio Del Pino, who was on a tour of oil producers to lobby for action to prop up prices, said his meeting with Naimi was "productive."
"But does 'productive' mean less production? The market thinks not, at least right now," said Phil Flynn, an analyst at Price Futures Group in Chicago.
France's Total has, meanwhile, agreed to buy 160,000 barrels per day (bpd) of Iranian crude for delivery in Europe, official news agency SHANA quoted Iranian Oil Minister Bijan Zanganeh as saying, showing Tehran's determination to claw back lost market share after the lifting of nuclear sanctions against the OPEC producer.
Global benchmark Brent futures were down 99 cents, or 2.85 percent, at $33.09 at 4:30 p.m. U.S. crude futures settled down $1.20, or 3.88 percent, at $29.69 a barrel. They were last trading down 74 cents, or 2.3 percent at $30.18.
"With the possibility of a production cutting deal quickly fading into the sunset, market participants are once again left to focus on the reality of the oversupplied global market," Energy Management Institute analyst Dominick Chirichella wrote in a note.
Morgan Stanley warned on Monday that a global supply overhang was unlikely to start clearing before 2017.
"We see limited upside for Brent (and range-bound) pricing over the next 12 months as the supply overhang is worked off," the bank said.
However, investors in Brent crude now hold more futures and options contracts that bet on the price rising than at any time since the InterContinental Exchange's records began in 2011, data from the exchange showed on Monday.
Money managers raised their net long position in Brent crude futures and options by 31,346 contracts to 292,300 lots in the week to Feb. 2.
Weekly U.S. crude and gasoline inventories hit record highs, data from the Energy Information Administration (EIA) showed last week. The latest weekly stock data is expected to be released on Wednesday.
The market is eyeing U.S. Federal Reserve Chair Janet Yellen's testimony to lawmakers on Wednesday along with U.S. crude inventory data from the EIA on the same day.
The International Energy Agency and OPEC are also due to release their monthly reports on Tuesday and Wednesday, respectively.