Oil prices took a dive on early Tuesday trading in the wake of analyst's warnings that this month's rally was overblown and that a production freeze would not help prices.
The overdone price rally earlier this month boosted prices for crude by more than 20 percent from beginning of August to the end of last week. Since then, oil prices have seen a 3.5 percent drop.
At 0032 GMT, International Brent Crude futures were at $48.98 per barrel, which was a drop of 18 cents. West Texas Intermediate saw 23 cents to $47.18 per barrel.
French bank BNP Paribas commented "The narrative of a rapid re-balancing of the oil market has ... met a few stumbling blocks. Some of Q2's disrupted supply returned, OPECS's collective output rose, and US shale oil is being spared the dramatic year-on-year declines forecast earlier in the year,"
Goldman Sachs said that if OPEC and other producers such as Russia decide to freeze oil output at the current levels, the move would leave production at record highs, and the supply and demand for oil would probably not be balanced.
Goldman Sachs anticipated that prices would stick between $45 and $50 per barrel through net summer, adding "a sustainable pick-up in disrupted production would lead us to lower our oil price forecast with WTI prices ... to average $45 per barrel."
On Monday, the company said that "The risk to OPEC production remains skewed to the upside". That came from Goldman's Peter Hackworth and Henry Tarr.
Oil also saw trading losses on Monday, with prices dropping 3 percent in London. Brent crude was at $49.36 on that market and West Texas Intermediate fell to $47.21.
On the plus side of the ledger, China said last week that its exports of diesel and gas were up in July, and a ceasefire by militants in Nigeria means that production could begin in the region.
Lincoln Brown for Oilprice.com
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