Oil fell 1 per cent on Thursday after soaring 8 per cent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support.
Brent crude oil futures were down 68 cents, or 1.25 percent, at $53.79 a barrel by 0743 GMT. They rose 8 per cent to $54.47 a barrel the day before.
US West Texas Intermediate (WTI) crude futures fell 1.21 per cent to $45.66 per barrel. They jumped 8.7 per cent to $46.22 per barrel in the previous session.
Both crude benchmarks are down roughly 40 per cent from highs touched in October.
Global stocks rebounded on Wednesday after the Trump administration's attempt to shore up investor confidence and a report on strong US holiday spending.
Shim Hye-jin, a commodity analyst at Samsung Securities in Seoul, said oil prices were still low despite gains made the day before.
“But if OPEC's cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-$70 a barrel next year.”
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed at a meeting earlier this month to limit output by 1.2 million barrels per day (bpd) starting in January.
Oil production has been at or near records highs in the US, Russia and Saudi Arabia, with the US pumping 11.6 million bpd of crude, more than both Saudi Arabia and Russia.
Although US sanctions have put a cap on Iran's oil sales, Tehran said on Wednesday that its private exporters have had “no problems” selling its oil and that 3 million barrels could be sold soon to non-government traders.
“Markets need more concrete evidence on improving fundamental metrics and to bring the supply-demand relationship back to balance before oil prices can reach a real bottom,” said Margaret Yang, market analyst for CMC Markets in Singapore.
Meanwhile, potentially bolstering oil prices, a preliminary Reuters poll on Wednesday forecast that US crude inventories would drop 2.7 million barrels in the week to Dec. 21, marking their fourth straight decline.
The American Petroleum Institute's (API) inventory data is due on Thursday, while the government's Energy Information Administration (EIA) is set to release its report on Friday.