Brent crude futures for September dropped 91 cents, or 1.2%, to $73.85 a barrel by 06:40 GMT while U.S. West Texas Intermediate (WTI) crude for August was at $72.11 a barrel, down $1.02, or 1.4%.
Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the UAE had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.
“The market is not taking any chances. Prices are very overbought anyway so traders might want to take some money off the table before the deal is concrete,” said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.
Talks among the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, had broken down earlier this month after the UAE objected to extending the supply cut deal beyond April 2022.
However, analysts at Goldman Sachs and Citi expect supplies to remain tight even if OPEC+ finalizes an agreement to raise output through end-2021.
“OPEC+’s grand bargain would prove to be too little, too late to tip the global oil balance due to logistical reasons,” Citi said, adding that Brent is on track to hit the mid-$80s in the near term.
In the United States, crude stockpiles fell for an eighth straight week last week, but gasoline and diesel inventories rose despite a drop in refinery utilization rates, data from the Energy Information Administration showed on Wednesday.
The large drawdown in crude stocks did little to boost oil prices as traders focused on the first rise in total petroleum stocks since early June, Moya said.
However, the world’s top crude importer China on Thursday reported record crude processing volumes at its refineries in June, easing some of the downward pressure on oil prices.
Elsewhere, the prospect of a quick return of Iranian supplies to global markets has been pushed back as negotiations over the revival of the 2015 nuclear deal will not resume until mid-August.
For a look at all of today’s economic events, check out our economic calendar.
(Reporting by Florence Tan; Editing by Ana Nicolaci da Costa, Richard Pullin and Kim Coghill)