Crude turned negative before recovering slightly this afternoon, after disappointing US inflation data shattered the brighter sentiment which had helped it to a five-week high earlier in the day.
Brent crude, the global benchmark, slipped 0.40 per cent to $48.16 (£37.11) per barrel on London's ICE Futures Exchange, before paring losses to trade at about $48.52.
West Texas Intermediate crude on the New York Mercantile Exchange fell by a similar amount to $45.57, subsequently inching back into positive territory at $46.06.
It came after official data showed US consumer prices remained unchanged month-on-month in July, missing expectations for a 0.1 per cent rise. This prompted investors to push back their expectations for an interest rate hike from the Fed.
Oil has been buoyed recently by hopes that some of the world's biggest oil producers will cap production to speed up the market recovery which has started to slow.
Russian energy minister, Alexander Novak, told a Saudi newspaper yesterday that his country was consulting with Saudi Arabia and other producers regarding ways to stabilise the market.
This fed into optimism created by Saudi Arabia energy minister Khalid al-Falih's suggestion last week that the de facto Organisation of Petroleum Exporting Countries (Opec) leader was open to measures to support the market.
But analysts have said Opec is unlikely to act, because it is effectively paralysed by the current market outlook. A similar attempt to broker an output freeze deal between Opec and non-Opec members fell through in April.
"The [Opec] meeting is unlikely to yield anything because Opec are caught in a squeeze," David Hufton of oil brokers PVM wrote in a note.
Hufton continued: "On the supply side it is their own increase in production that is prolonging the price depression but if they freeze or restrain production to lift prices they will stimulate competing non-Opec supply and lose market share."