Oil prices pare losses

 Oil prices fell on Tuesday,
reflecting growing concerns that a two-month rally
may be fading, as supply looked set to keep rising and
there appeared to be little immediate prospect of
demand keeping pace.

The oil price has risen more than 45 percent since
mid-February ahead of a meeting next month of the
world's major producers to discuss an output freeze.
But there is growing scepticism about the outcome of
the meeting.

"Verbal intervention, which has obviously helped the
market greatly over the past two months, combined
with a production slowdown in the U.S., has probably
taken (oil) as far as it can. Now the market really
wants to see some action," Saxo Bank senior manager
Ole Hansen said.

"We're seeing more and more commentators raise the
flag and saying 'have we seen too much, too soon?' in
terms of the rally across the sector."

Brent crude futures LCOc1 fell by $1.20 to $39.07 a
barrel by 1350 GMT (9.50 a.m. ET), having lost 7
percent in the last week, while U.S. crude CLc1
dropped by $1.32 to $38.07.

OPEC and other major suppliers, including Russia, are to
meet on April 17 in Doha to discuss an output freeze
aimed at bolstering prices.


The oil price touched session lows earlier after a source
familiar with Iranian thinking said Iran would attend
the meeting, but this did not mean it would take part
in negotiations over production freezes.

Kuwait said on Tuesday it had agreed with Saudi
Arabia to resume production at the jointly operated
Khafji field, which shut in October 2014 for
environmental reasons, having been producing between
280,000 and 300,000 barrels per day.

With ballooning global inventories, signs some OPEC
members are losing market share, plus little evidence
of a strong pick-up in demand, analysts said oil is likely
to trade in a range.

"There is a rebalancing on the way, but we are still
running a surplus and stocks are building up as far as
we can see," SEB commodities analyst Bjarne
Schieldrop said.

"There is a clear risk for a pull-back in Brent crude
oil with a return to deeper contango again. Long
positioning in Brent is at record highs and vulnerable
for a bearish repositioning."