Oil prices fell on Tuesday, reflecting growing concerns that a two-month rally may be in danger of fizzling, while analysts forecast another rise to record levels for U.S. crude stockpiles.
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The oil price has risen by more than 45 percent since mid-February ahead of a meeting next month of the world's major producers to discuss an output freeze to support prices. But there is growing skepticism about the outcome of the meeting.
"The amount of verbal intervention, which has obviously helped the market greatly over the past two months, combined with a production slowdown in the U.S., has probably taken (oil) as far as it can, now the market really wants to see some action," Saxo Bank senior manager Ole Hansen.
"We're seeing more and more commentators raise the flag and saying 'have we seen too much, too soon?' in terms of the rally across the sector."
Brent crude futures fell by $0.96 to $39.31 a barrel by 1124 GMT, having lost some six percent in the last six trading days, while U.S. crude fell 78 cents to $38.60.
OPEC and other major suppliers, including Russia, are to meet on April 17 in Doha to discuss an output freeze aimed at bolstering prices.
But with ballooning global inventories, signs some OPEC members are losing market share, plus little evidence of a strong pick-up in demand, analysts said oil is likely to trade in a range.
"There is a rebalancing on the way, but we are still running a surplus and stocks are building up as far as we can see," SEB commodities analyst Bjarne Schieldrop said.
"There is a clear risk for a pull-back in Brent crude oil with a return to deeper contango again. Long positioning in Brent is at record high and vulnerable for a bearish repositioning."
Data on Monday from the InterContinental Exchange showed speculators hold the largest net long position in Brent futures on record.
U.S. commercial crude oil stockpiles were expected to have reached record highs for a seventh straight week, while refined product inventories likely fell, a preliminary Reuters survey showed late on Monday.
Barclays said in a note on Monday net flows into commodities totalled more than $20 billion in January-February, the strongest start to a year since 2011, and prices could fall 20 to 25 percent if that were reversed.
(Additional reporting by Aaron Sheldrick in TOKYO; Editing by Jane Merriman and Susan Thomas)