Oil prices turned higher in Asian trade Thursday, a day after suffering losses in response to data showing a surprise jump in US stockpiles, while hopes for a deal to limit output were dealt a blow.
The US energy department said Wednesday that inventories soared 2.5 million barrels last week, confounding forecasts for a fall and fanning worries about a global supply glut.
Both main contracts plunged on the news, with West Texas Intermediate shedding 2.8 per cent and Brent down 1.8 per cent Wednesday.
Prices extended their losses in early Asian trade but turned higher in the afternoon. At around 11.41am UAE time, WTI was up 8 cents to $46.85 and Brent added one cent to $49.06.
WTI has now lost around 4.5 per cent since the end of last week while Brent has slipped 3.5 per cent.
The commodity entered a bull market last week – a 20 per cent rise from recent lows – and rallied for seven straight sessions thanks to news that export grouping Opec and Russia would hold talks on output to address the oversupply crisis.
A report that Iran had seemingly changed its previous position to also consider limiting production provided further support.
However, an Iranian oil ministry source told AFP Wednesday that Tehran has yet to decide whether to move towards a cap or even to attend the gathering in Algeria next month.
A previous Opec attempt to freeze output collapsed in April largely because of Iran's refusal to join, having just emerged from international sanctions and keen to maximise its oil revenues.
"The market is possibly jittery (over the coming Opec meeting)," Fat Prophets resource analyst David Lennox told AFP from Sydney.
"That's why we're seeing this sort of volatility because the market isn't quite sure what outcome to expect from next month's Opec meeting."