Crude oil prices slid on Wednesday, pressured by a strong U.S. dollar and high stocks of physical oil, though prices remained on track for a monthly gain of more than 10 percent.
Brent crude oil futures LCOc1 were trading at $48 per barrel at 0829 GMT (0429 ET), down 37 cents from the previous close, while U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 21 cents at $46.14.
Oil prices had rallied by more than 20 percent from the beginning of August on hopes that producers were reviving talks on a possible output freeze, setting prices on course for their largest monthly gains since April.
Analysts, however, said the focus had shifted to physical market fundamentals, which remained shaky.
“The market is getting tired of those headlines,” Olivier Jakob, managing director of Swiss-based consultant PetroMatrix, said of a potential production freeze.
“Fundamentally, there is not a lot to support oil because the stocks are still at very high levels,” he said.
On Wednesday Saudi Arabian energy minister Khalid al-Falih said that the top crude exporter does not have a specific target figure for its oil production and that its output depends on the needs of its customers.
Yet high oil stocks could limit any quick recovery in prices. U.S. crude stocks rose by 942,000 barrels to 525.2 million barrels in the week to Aug. 26, data from industry group the American Petroleum Institute showed on Tuesday.
Official U.S. oil inventories data from the Energy Information Administration is due on Wednesday.
The strong U.S. currency, which makes dollar-priced commodities more expensive for holders of other currencies, was also affecting oil prices. The U.S. dollar index, measured against a basket of six leading currencies, touched 96.143 .DXY on Tuesday, its highest since Aug. 9.
“The pullback in commodity prices is likely to continue in the short term, with a stronger U.S. dollar and weaker fundamentals,” Australian bank ANZ said in a note.
ANZ said that a persistent oil product glut in the United States had limited price support from refinery outages caused by storm threats in the Gulf of Mexico.
Many analysts still expect a tighter supply and demand balance towards the end of the year and are raising price forecasts accordingly, with Barclays liting its fourth-quarter forecast by $2 to $52 a barrel.
“The balances are slightly tighter in Q4 than previously assessed,” the bank said.
(Additional reporting by Mark Tay and Henning Gloystein in Singapore; Editing by David Goodman)
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