Oil prices fell today, as seasonal changes fed into fears that the recent rally would be short lived.
Brent crude, the global benchmark, fell three per cent to $39.8 per barrel this afternoon. Meanwhile, US West Texas Intermediate, the US benchmark, slumped 2.3 per cent to $37.4.
Analysts said they expect refineries around the world to buy less oil to turn into products such as gasoline as they enter maintenance season.
"Fundamentally you would expect prices to weaken from here because we're about to head into peak refinery turnaround season," said Virendra Chauhan, an analyst at Energy Aspects told Reuters.
"We expect weakness in the physical market as demand from refineries comes off."
Oil prices hit three-month highs earlier this week on growing optimism that the market had hit a bottom, nevertheless analysts cautioned that this was premature.
All eyes remain on a potential production freeze deal between Opec and non-Opec oil producers, led by Saudi Arabia and Russia.
Latin American oil producers Venezuela, Colombia, Ecuador and Mexico today delayed their meeting due tomorrow to talk about a production freeze.