Oil fell towards $34 a barrel on Thursday, giving up an earlier gain, as a U.S. government report showing a rise in crude stocks underlined the supply glut, countering optimism over this week’s deal by oil producers to freeze output.
The U.S. Energy Information Administration said crude inventories rose by 2.1 million barrels last week, less than analysts expected.
But Wednesday’s report from industry group the American Petroleum Institute said they unexpectedly fell.
“It’s overall bearish and nullifies the API data across the board,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
Brent LCOc1 fell 20 cents to $34.30 a barrel by 1623 GMT (1123 ET), having closed 7.2 percent higher in the previous session. U.S. crude CLc1 was up 11 cents to $30.77.
Earlier in the session, Brent rallied above $35, adding to Wednesday’s surge, after Iran welcomed this week’s plan by Russia and Saudi Arabia to freeze output and also supported by the API report.
Analysts had expected a sell-off if the U.S. government inventory report did not confirm the API’s stock decline and warned of continued choppy trading.
“What we see still is extreme volatility,” said Carsten Fritsch, analyst at Commerzbank. “I would not be surprised to see prices retreating again by a big margin in coming days.”
Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar on Wednesday but did not say whether Iran would cap its output in keeping with the move by Russia and Saudi Arabia.
On Thursday, Iraq’s oil minister said talks would continue between OPEC and non-OPEC countries to prop up prices.
Oil has collapsed from levels above $100 a barrel in mid-2014 due to excess supply, in a slide that deepened after the Organization of the Petroleum Exporting Countries later that year dropped its policy of cutting supply to boost prices.
“The agreement will do little to reduce the current supply glut,” BMI Research said in a report on Thursday.
Iran exported about 2.2 million barrels per day (bpd) of crude before 2012, when sanctions imposed by world powers to curb Tehran’s nuclear program cut shipments to about 1.1 million bpd.