Oil prices fell overnight, retreating from an eight per cent rally in the previous session as Wall Street stocks also fell and the oil market focused on signs of faltering global economic growth and record production of crude.
Brent crude futures dropped 4.24 per cent, or $US2.31, to settle at $US52.16 a barrel.
US West Texas Intermediate crude futures fell $US1.61 to settle at $US44.61 a barrel, down 3.48 per cent.
‘The market is giving back some of its gains from yesterday that were brought along with the euphoria in the stock market,’ said Andrew Lipow, president of Lipow Oil Associates in Houston.
Prices surged on Wednesday, tracking a spike on Wall Street after President Donald Trump’s administration attempted to shore up investor confidence.
US stocks retreated on Thursday, dragging oil prices.
Brent and WTI have lost more than a third of their value since the beginning of October and are heading for declines of more than 20 percent in 2018.
Concerns about slowing global economic growth have dampened investor demand for riskier asset classes and pressured crude futures.
Market participants are worried about a glut of crude.
Three months ago it looked as if the global oil market would be undersupplied through the northern hemisphere winter as US sanctions removed large volumes of Iranian crude.
But other oil exporters have compensated for any shortfall, depressing prices.
The Organisation of the Petroleum Exporting Countries, along with Russia and other producers, agreed this month to reduce output by 1.2 million barrels per day (bpd), equivalent to more than 1 per cent of global consumption.
But the cuts will not take effect until January and oil production has been at or near record highs in Russia, Saudi Arabia and the United States, now the world’s top crude producer pumping 11.6 million bpd.
Russian Energy Minister Alexander Novak said the country will cut its output by between 3 million and 5 million tonnes in the first half of 2019. It then will be able to restore it to 556 million tonnes (11.12 million barrels per day) for the whole 2019, on par with 2018, he added.
Although US sanctions have put a cap on Iran’s oil sales, Tehran has said its private exporters have ‘no problems’ selling its oil.
US crude inventory data will be released from the American Petroleum Institute after settlement on Thursday and from the US Energy Information Administration on Friday.
A Reuters survey estimated that US crude inventories dropped 2.9 million barrels in the week to December 21.