Oil futures extended losses into a third session in Asian trade on Wednesday, as US crude stocks last week surged to more than half a billion barrels and as Iran plans to boost exports from March.

Milder weather forecast for the last eight weeks of the US November-March winter heating season has also dampened demand hopes.

Brent for April delivery LCOc1 had dropped 25 cents to $32.47 a barrel as of 0204 GMT (9:04 AM EDT), after settling down $1.52, or 4.4 per cent.

US crude, also known as West Texas Intermediate (WTI) CLc1, fell 27 cents to $29.61, after ending the previous session down $1.74, or 5.5 per cent.

"Oil prices are coming off again. Prices are going to zig-zag for a while," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

US crude stocks rose by 3.8 million barrels to 500.4 million in the week to Jan. 29, data from industry group, the American Petroleum Institute showed on Tuesday.

Weekly inventory data from the US Department of Energy's Energy Information Agency is due later on Wednesday.

"The (global) inventory situation is going to get worse in the second quarter as we hit the peak refining rate at the end of this quarter," Nunan said.

"(But) this has been so well documented that its been built into prices. I do think we're close to the bottom and the bottom in prices will be this quarter."

Nunan forecast Brent would trade in a $25-$35 a barrel range in the first quarter and then slowly recover over the rest of the year.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 141,000 barrels, the API said.

The increase led to renewed fears of overflowing oil tanks at the key US storage hub, causing the spread between prompt and forward US crude oil futures to slump to an 11-month low.

"The US crude inventory is already at the highest levels since (the) 1930s," ANZ analysts said in a note on Wednesday.

Traders fear that filling tanks to the brim could cause the next leg of a rout on distressed selling.

Meanwhile, Iran is aiming for crude exports of 2.3 million barrels per day in the fiscal year beginning on March 21, the managing director of the National Iranian Oil Company was quoted as saying on Tuesday.

That is higher than the 1.44 million bpd Iran is expected to export in February and 1.5 million bpd in January, according to data on Iran's preliminary tanker loading schedules.

Russia is ready to implement further cooperation in the oil market with Opec and non-Opec countries, Russian Foreign Minister Sergei Lavrov said on Tuesday. – Reuters