Prices rose the previous day as traders looked past an increase in US commercial crude inventories to a record high to a fall in stocks of refined products like gasoline.
But worries about brimming supplies quickly returned to the fore as hopes the world’s top producers had sealed a deal to limit their output were swiftly dashed.
“OPEC is not going to be able to do anything, that’s the reality of it,” said Michael McCarthy, chief market strategist at CMC Markets Australia.
“It has no capacity to coordinate the actions of its members so any oil bulls that are relying on OPEC to come to the table are going to be very disappointed.”
At around 0415 GMT, the US benchmark West Texas Intermediate (WTI) for delivery in April fell 24 cents, or 0.75 percent, to $31.91. Global benchmark Brent for April eased 32 cents, or 0.93 percent, to $34.09 a barrel.
Crude jumped after major producers Saudi Arabia and Russia proposed to freeze output if others followed suit, briefly dragging prices from the doldrums after they hit 13-year lows this month.
Oil prices have fallen some 70 percent from a mid-2014 high over concerns of a lasting surplus of supplies, at a time when growth in top consumers like China is slowing.
Hopes the Organization of the Petroleum Exporting Countries might trim production were dashed on Tuesday when Saudi Oil Minister Ali al-Naimi said members were instead planning to freeze output at January’s high levels.
Key producer and OPEC member Iran, which is ramping up production after nuclear-linked Western economic sanctions were lifted, has also reacted coldly to the freeze proposal.