Crude oil futures prices dropped around 2 percent on Wednesday, heading back towards $30 a barrel as profit-taking wiped out a chunk of the gains notched up in the previous session on hopes for output cuts.
A bigger-than-expected build in US crude inventory also weighed on prices.
Brent crude had declined 60 cents to $31.20 a barrel by 0134 GMT, after settling up $1.30, or 4.26 percent, at $31.80 a barrel on Tuesday.
US crude had fallen 77 cents to $30.68 a barrel, after hitting a session-low of $30.30 a barrel. It ended Tuesday 3.7 percent, or $1.11, higher at $31.45 a barrel.
“The positive sentiment stemmed from strong US corporate earnings and talk of OPEC and Russia considering production cuts. We consider the likelihood of any agreement between these parties as extremely low,” ANZ said in a note on Wednesday.
“However, rising U.S. crude stockpiles are likely to remain a headwind in the near term. At the current pace, the U.S. crude stockpiles will cross the all-time high of April last year in the next month.”
US crude stocks rose by 11.4 million barrels in the week to Jan. 22 to 496.6 million, compared with analyst expectations for an increase of 3.3 million barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub fell by 664,000 barrels, data from industry group the American Petroleum Institute showed on Tuesday.
US and global benchmark Brent crude prices rallied on Tuesday after the oil minister of Iraq said that OPEC kingpin Saudi Arabia and top non-OPEC producer Russia were showing signs of flexibility about agreeing to tackle an oil glut that has pushed prices to 12-year lows.
Wall Street shares also rebounded in choppy trading on Tuesday on hopes oil output cuts would address the supply glut that has also punished equity markets.
Asian stocks were subdued on Wednesday as a wait-and-see mood prevailed ahead of a Federal Reserve policy statement due later in the day.