Oil prices fell on Tuesday, with Goldman Sachs warning that August’s price rally had been overdone and that a proposed oil production freeze at current near-record levels would not help rein in an oversupplied market.
International Brent crude oil futures were trading at $48.86 per barrel at 0644 GMT, down 30 cents, or 0.61 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude was down 40 cents, or 0.84 percent, at $47.01 per barrel.
Analysts said the falls were a result of an overdone price rally this month which lifted crude by over 20 percent between the beginning of the month and late last week.
Since then, Brent prices have fallen back by more than 4 percent.
“While oil prices have rebounded sharply since Aug. 1, we believe this move has not been driven by incrementally better oil fundamentals, but instead by headlines around a potential output freeze as well as a sharp weakening of the dollar (and exacerbated by a sharp reversal in net speculative positions),” Goldman Sachs said.
The bank said a proposal by members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers like Russia to freeze output at current levels “would leave production at record highs” and, therefore, do little to bring supply and demand back into balance.