Crude oil futures fell on Tuesday as optimism faded for an output-limiting deal from an oil producer meeting in Algeria to curb one of the worst supply gluts in history.
Brent crude futures fell $1.30 to $46.05 a barrel, having closed up $1.46, or 3.2%, in the previous session. US West Texas Intermediate crude dropped $1.31 cents to $44.62 a barrel, after rising $1.45, or 3.3%, in the previous session, Reuters reported.
Saudi Arabia dashed hopes on Tuesday that producers could clinch a deal at the Sept. 26-28 informal meeting of OPEC and other producers, including Russia, after sources within the exporter group said differences between the kingdom and Iran remained too wide.
"It's all about what's going on in Algiers really ... the prospect or no prospect of a supply deal," Olivier Jakob, oil analyst at Petromatrix, said. "There is no new fundamental development that is more important than Algiers."
Russia's Energy Minister Alexander Novak on Tuesday said the country would want to freeze oil output at current levels.
Russia's oil output recently touched an all-time high of 11.75 million barrels per day.
Analysts said current high production in Russia and Saudi Arabia, combined with potential increases from Libya and Nigeria, made discussions in Algiers somewhat hollow.
"The announcements in Algeria contrast sharply with reality," analysts at Commerzbank said in a note, adding "all the signs point therefore to the comfortable supply situation continuing, that is to say to ongoing overproduction."
US investment bank Goldman Sachs cut its price forecast for WTI crude in the fourth quarter to $43 a barrel, from a $45-$50 range, saying that it expects global supply to exceed demand by 400,000 bpd in the quarter.
