Oil fell below $45 a barrel on Tuesday after rallying to a two-week high the previous day, as concern about a supply glut outweighed hopes of producer action to prop up prices.
In the latest sign of ample supplies, market intelligence firm Genscape reported a rise of more than 307,000 barrels at the Cushing, Oklahoma delivery hub for U.S. crude, traders said. U.S. inventory reports are due on Tuesday and Wednesday.
Brent crude for October was down 35 cents at $45.04 a barrel by 0828 GMT, after rising $1.12 on Monday. The global benchmark fell nearly 15 percent in July. U.S. crude for September was down 24 cents at $42.78.
“One can only wonder how long this enthusiasm will last considering the oversupplied fundamental backdrop,” said Tamas Varga of oil broker PVM, referring to Monday’s rally.
OPEC comments helped fuel the gain on Monday. Its president Qatar, in a rare statement on the market outlook issued by the group’s Vienna headquarters, said the market was on the path to rebalancing and the drop in prices would be temporary.
OPEC sources have been saying since June that renewed talks about a global output freeze could take place in September, when most members, plus non-members such as Russia, are expected to attend an International Energy Forum meeting in Algeria.
The oil minister for cash-strapped Venezuela sought to keep alive the prospect of producer action to boost prices, saying on Monday a meeting between OPEC and non-OPEC countries may take place “in the coming weeks”.
But Russia said it does not see grounds for new talks with OPEC yet. Iran, which refused to join an initiative discussed earlier this year to freeze output levels, has not said whether it would cooperate with any new effort.
Later on Tuesday, the latest round of U.S. inventory reports will be in focus. Analysts in a Reuters poll forecast that U.S. crude stockpiles fell by 1 million barrels last week.
The American Petroleum Institute, an industry group, is due to release its inventory update at 2030 GMT, ahead of the government’s report on Wednesday.
Source: Reuters (By Alex Lawler; Additional reporting by Osamu Tsukimori in Tokyo; Editing by Dale Hudson)