By Yongchang Chin

(Bloomberg) -- Oil held the biggest two-day drop in a month as concerns about global oversupply continued to weigh on sentiment.

Brent crude traded around $62 a barrel after losing 3% over the previous two sessions, while West Texas Intermediate was above $58. The US said domestic crude production would hit a record 13.6 million barrels a day this year, adding to a flood of supply hitting the global market, while several of India’s largest refiners are buying Russian oil, easing the worst fears of a supply threat.

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“I’m surprised we have not seen any attempts to force Brent properly below $62,” said Ole Hansen, head of commodities strategy at Saxo Bank AS. “I’m increasingly becoming a bit of a contrarian here, given the limited selling response to all the negative news.” The biggest risk to prices could be to the upside if next year’s oversupply is already priced in, he added.

The industry-funded American Petroleum Institute reported US crude inventories shrank by 4.8 million barrels last week, according to a document seen by Bloomberg. However, large gains were seen for fuel stockpiles — both gasoline and distillates such as diesel. Official data will be released on Wednesday.

Crude has been trapped in a tight $4-a-barrel range since the start of November, as oversupply concerns vie with geopolitical risks surrounding the flow of Russian barrels into nations including India. Key market reports from the International Energy Agency and OPEC are due later this week, which may provide more clarity on the outlook.

--With assistance from Alex Longley and John Deane.

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