Oil prices were under pressure in European trade on Wednesday, falling from a five-week high as market players awaited fresh weekly information on U.S. stockpiles of crude and refined products.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 10:30AM ET (14:30GMT) amid expectations for an increase of 522,000 barrels.
Gasoline inventories are expected to decline by 1.638 million barrels while stocks of distillates, which include heating oil and diesel, are forecast to fall by 742,000 barrels, according to analysts.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by 1.0 million barrels in the week ended August 12. It also showed an increase of 2.2 million barrels in gasoline stocks, a worrying demand signal well ahead of the end of the summer driving season.
Crude oil for September delivery on the New York Mercantile Exchange dipped 30 cents, or 0.64%, to trade at $46.28 a barrel by 3:59AM ET (07:59GMT) after rallying to $46.73 in theprior session, the most since July 12.
Meanwhile, on the ICE Futures Exchange in London, Brent oil for October delivery shed 40 cents, or 0.81%, to trade at $48.83 a barrel. On Tuesday, London-traded Brent prices surged to $49.36, a level not seen since July 7.
Crude prices are up by more than 10% over the past four trading sessions amid indications major oil producers are reconsidering a collective production freeze in a bid to boost the market.
The rally started last Thursday after Saudi Arabia’s energy minister said the country would work with other oil producers to stabilize prices at a meeting in Algeria next month.
Russian Energy Minister Alexander Novak said on Monday his country is opening up to an agreement with other major oil producers to cap output “if necessary” to achieve market stability.
However, market players remained skeptical that the meeting would result in any concrete actions. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative.
Despite recent gains, indications of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products around the world is expected to keep prices under pressure in the near-term.