Oil prices failed to hold on to gains yesterday after rising on the latest data from the International Energy Agency (IEA), showing US crude inventories rose less than expected over the last week.
Brent prices initially jumped to $40.54 a barrel in early afternoon trading but by the evening had dropped to $39.27.
US benchmark West Texas Intermediate rose to $39.77 a barrel on the news, but later fell to $38.88.
Commercial inventories rose by 2.3m barrels over the last week to a fresh record of a 534.8m. Gasoline inventories decreased by 2.5m barrels.
The slowing stocks were offset by expectations that Iran will add 500,000 barrels of oil a day within a year from existing oilfields, according to the head of the IEA.
Preliminary IEA numbers showed that US shale production has continued to slide as rigs close down in the face of persistently low prices.
The rig count in the US has fallen by over 50 per cent over the last 12 months, though producers have managed to cut costs and hold out longer than was expected.
Prices have risen 50 per cent since January as a result of a deal between Russia and Opec, led by Saudi Arabia, to freeze oil production at January levels in an attempt to prop up the depressed oil price.
Opec rebel Iran has also now signalled its willingness to join talks over an output cap and said it will attend the next meeting set for 17 April in Doha, though remains committed to ramping up its production to regain market share.
Reports earlier this week that Saudi Arabia’s market share has fallen further in recent years due to the encroachment of shale could mean its willingness to scale back its own production begins to wane.