Oil prices fell away from 5-week highs on Wednesday as analysts doubted possible producer talks to rein in ballooning oversupply would be successful.
Brent crude futures LCOc1 were trading at $48.86 per barrel at 0702 GMT (3.02 a.m. ET), down 37 cents from their last settlement. Despite the dip, prices are still up over 17 percent since early August and remain not far off a five-week high of $49.36 a barrel reached the previous day.
U.S. West Texas Intermediate (WTI) crude CLc1 was at $46.34 per barrel, down 24 cents from its last close, but still up 18 percent from early August.
Traders said that profit-taking following recent rallies was weighing on prices amid expectations that weekly U.S. EIA oil inventory data due later in the day would show the glut in crude and oil products supplies had widened.
“I think the U.S. inventory data will show a greater glut in products which would weigh on sentiment,” a Singapore-based trader said, adding that strong July OPEC production figures would weigh on prices.
South Korea’s crude oil imports rose 4.5 percent to 266.4 million barrels in the second quarter of 2016 from a year ago due to growing shipments from Iran after sanctions were lifted, while local oil consumption also increased on the back of low prices.
In the April-June period, Seoul imported 25.35 million barrels of Iranian crude oil, or 278,615 bpd, 123.3 percent above the 11.35 million barrels imported a year earlier when sanctions were imposed on Tehran’s disputed nuclear program.
The fight for market share among some OPEC producers has fueled doubts that talks by producers to rein in oversupply would be successful.
“The rumor mill around producer cooperation has resumed, spurred by recent comments from Saudi Arabia’s oil minister, allowing oil prices to gain,” said French bank BNP Paribas.
Yet like many, BNP said it doubted a successful outcome.
“Given the dismal track record when it comes to recent producer cooperation, we are not holding our breath for an eventual freeze in output and even less so for a much-needed reduction in production to help re-balance the oil market.”
An OPEC meeting in June also failed to reach an agreement to limit production, and the group’s output has since reached new records.
On the demand side, BMI Research said that Chinese imports would be relatively weak, compared with previous record years, as “a domestic fuels glut and scheduled maintenance works at several refineries (will) keep a lid on imports over Q3”, although it added that China’s long-term imports would be strong due to falling domestic production.