REUTERS
Oil prices dipped early on Thursday after U.S. crude hit 2016 highs the day before and Brent shot back over $40 per barrel, with analysts warning that larger gains would be unwarranted as a global glut continues to outweigh strong demand, Reuters reported.
Expectations of more stimulus from the European Central Bank (ECB) this week, which would strengthen the dollar against the euro and potentially hamper dollar-traded oil imports, also weighed on markets, analysts said, according to Reuters.
"The ECB will cut deposit rates by 20 bps (basis points) and extend its bond buying program by one year. This could be bullish for the dollar and bearish for oil," French bank Societe Generale said.
"Moreover, recent price gains are somewhat tenuous, because they've been driven by market sentiment, which can change quickly, and by supply disruptions, which are temporary," it added.
Brent crude futures LCOc1 were at $40.88 per barrel at 0339 GMT, down 19 cents from their last close.
U.S. crude CLc1 was down 8 cents at $38.21 per barrel, according to the report.
The dips came after prices rose as much as 5% on Wednesday, with U.S. crude hitting three-month highs following a big gasoline inventory drawdown, which overshadowed record-high crude stockpiles.
With U.S. crude inventories at records despite strong demand, the focus lies on a potential agreement between producers from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and non-OPEC exporters led by Russia to rein in output.
Yet beyond announcing talks about freezing output near record levels, no agreement has been reached, it is noted.