Saudi Arabia’s government reiterated its commitment to work with Opec members and other producers to stabilise the oil market.
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Brent futures LCOc1 settled up 17 cents at $45.83 a barrel.
Light, sweet crude for January delivery rose $1.27, or 3%, to $43.02 a barrel on the New York Mercantile Exchange.
Crude prices rose as much as 1 percent on Monday after Saudi Arabia’s pledge to work on price stability offset some worries about the global oil market glut. The rebound soon lost steam, however, as analysts noted the remarks were in line with previous Saudi statements.
Oil markets were keeping an eye on developing geopolitical tensions in the Middle East as Jordan’s King Abdullah will hold talks with Russian President Vladimir Putin on how to tackle “terror groups” led by Islamic State in Syria, an official source said.
“The overarching concern in this market is the growing inventory levels for crude, and that doesn’t seem to be easing despite the strong refinery runs we’ve been having”, said Phil Flynn, analyst at the Price Futures Group in Chicago.
After coming within nearly a nickel of closing the gap, the Saudi news offered an excuse to cover short positions, he said.
“The burden of carrying high US crude oil inventories is large”, Kang Yoo-jin, commodities analyst at NH Investment and Securities based in Seoul, said in a note on Monday.
Oil is sliding again following some fleeting gains, while Venezuela is predicting that crude prices may fall to the mid-$20s next year if OPEC fails to stem supply.
Saudi Arabia and Qatar are considering Venezuela’s proposal for an equilibrium price of US$88 (S$124.50) a barrel, Venezuelan Oil Minister Eulogio Del Pino told reporters on Sunday in Tehran. S crude benchmark for January contract slipped 91 cents to $40.99 a barrel.
That kind of price would be only be temporary “shock to the system”, he said and would result from the continued oversupply of global crude. “As it became clear that this was nothing new, the market returned to negative territory”.
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Traders are also awaiting a report later Wednesday showing U.S. commercial crude stockpiles in the week ending November 20. It hit $40.59 earlier in the session, near levels seen on Friday before the December contract expired. Reuters data showed that was the deepest contango since 2011 for a prompt WTI contract versus the second month.
