Investing.com - Oil prices fell sharply for the second day in a row on Tuesday, retreating further from the highest levels in nearly two months as market players shifted their focus to weekly data from the U.S. on stockpiles of crude and refined products.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (20:30GMT) later on Tuesday. Official data from the Energy Information Administration will be released Wednesday.
Crude oil for October delivery on the New York Mercantile Exchange slumped 46 cents, or 0.97%, to trade at $46.95 a barrel by 9:38AM ET (13:38GMT), after plunging $1.70, or 3.46%, on Monday. The U.S. benchmark rallied to $49.36 last Friday, the most since July 5.
Meanwhile, on the ICE Futures Exchange in London, Brent oil for October delivery declined 31 cents, or 0.63%, to trade at $48.83 a barrel after dropping $1.72, or 3.38%, in the prior session.
London-traded Brent futures surged to a two-month peak of $51.22 late last week amid speculation major oil producers, led by Saudi Arabia and Russia, are reconsidering a collective production freeze in an effort to boost the market.
Over the past two weeks, crude prices soared almost $10 a barrel, or nearly 25%, as the prospect of an output freeze by major producers at an informal OPEC meeting in Algeria next month sparked a massive rally.
However, analysts have warned that the chances of suppliers, particularly members of OPEC, agreeing on a deal were limited.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.
Indications of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products around the world also weighed.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 10 to 406, the eighth consecutive weekly rise and the 11th increase in 12 weeks.
Some analysts have warned that the current rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, underlining concerns over a global supply glut.