Oil prices lost momentum on Tuesday, as traders took profits amid news that the Organization of the Petroleum Exporting Countries (OPEC) would hold informal talks on its production strategy at next month’s International Energy Forum in Algeria.
West Texas Intermediate (WTI) for September delivery fell from nearly three-week highs, settling down 25 cents or 0.6% at $42.77 a barrel on the New York Mercantile Exchange. The futures price was down as much as 52 cents earlier in the day.
Since falling below $40 a barrel in early August, US crude futures have rallied more than 9%. WTI officially entered into bear market territory earlier this month, having fallen more than 2% from its June highs.
Brent crude, the international futures price, fell 46 cents or 1% to $44.93 a barrel.
The American Petroleum Institute (API) said crude inventories rose by 2.1 million barrels last week following a draw of 1.3 million barrels the previous week. However, gasoline inventories fell 3.9 million barrels, API data showed.
The US Energy Information Administration (EIA) will release official inventory data on Wednesday.
Oil prices soared on Monday after a report from The Wall Street Journal indicated that OPEC members Kuwait, Venezuela and Ecuador were vying for a production freeze. OPEC and non-OPEC members failed to agree to a production cap in April after Saudi Arabia said it would not curb output without Iran, a country that is ramping up production and exports after sanctions against it were lifted at the start of the year.
OPEC president and Qatari energy minister Mohammed bin Saleh al-Sada said on Monday the 14-member producer group would hold informal talks on September 26-28 at the International Energy Forum in Algeria.
Frankfurt-based Commerzbank expressed skepticism about OPEC’s upcoming meeting. The meeting is “likely to prove to be nothing but empty talk, with OPEC sticking with its policy of defending its market shares,” the bank said in a note.
However, the mere mention of a meeting is likely to keep prices north of $40 a barrel for the next month-and-a-half.
Oil’s precipitous decline in July has raised pressure on cash-strapped producers to support prices. According to analysts, oil prices will continue to flounder over the short-term, as a global glut of refined products continues to weigh on the market.