Oil fell Wednesday amid speculation that OPEC will leave its production quotas unchanged at this week's meeting to avoid hurting an already fragile global economy.
By early afternoon in Europe, benchmark West Texas Intermediate crude for July delivery was down 20 cents to US$83.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract had risen 62 cents to settle at $83.32 in New York on Tuesday.
In London, Brent crude for July delivery was up 42 cents at US$97.56 a barrel on the ICE Futures exchange.
The Organization of Petroleum Exporting Countries is scheduled to hold its quarterly meeting Thursday against a backdrop of a 24 per cent decline in the price of crude over the last month or so. Some of the group's 12 members, such as Iran and Venezuela, will likely call on the cartel to cut output in a bid to boost prices.
However, analysts expect most of OPEC, led by Saudi Arabia, will oppose pinching supplies because the global economy is fragile. Lower oil prices should ease fuel costs, eventually freeing up consumer spending in net crude importers such as the United States, Europe and China.
"OPEC would not want to be seen to kick the global economy when it is down," analysts at Capital Economics wrote in a report.
The International Energy Agency said that while oil supplies had grown slightly in May, to 91.1 million barrels a day, several risks on the horizon, including the effect of sanctions against Iran and the possibility of resurgent growth in China, called for a cautious outlook.
"The market can clearly now be characterized as better supplied, but over-supplied looks something of a stretch, given the myriad uncertainties that lie ahead for the summer," the Paris-based IEA said in its monthly Oil Market Report released Wednesday.