A second source briefed on the discussions said: "We need to reduce but would not want to reduce by much". That would be the US benchmark's worst showing since October 2008. With fears of a scarcity now giving way to worries about oversupply, the Organisation of Petroleum Exporting Countries and allies such as Russian Federation are preparing to discuss more cuts when they meet next week in Vienna.
Why do oil prices fluctuate?
"While oil retreated on oversupply concerns and it's still possible that it could teeter in the short term, prices will go higher in the mid- to long-term", Lim Jaekyun, a commodities analyst at KB Securities Co., said by phone in Seoul.
The OPEC meeting in Vienna will follow a gathering by the Group of 20 (G20) nations in Argentina this weekend, at which oil policy is expected to be discussed, potentially laying the groundwork for an OPEC deal.
The retail fuel prices in India, though, haven't reduced in proportion to the global prices.
Brent oil edged down towards $60 on Wednesday, erasing early gains of more than 1%, with the market unconvinced on the prospect of OPEC cuts next week.
The Minister of State for Petroleum Resources, Ibe Kachikwu has disclosed that the Federal Government would collaborate with Saudi Arabia to revamp Nigeria's refineries. Now the market is being flooded with oil supply.
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Oil slid toward the deepest monthly loss since the worldwide financial crisis a decade ago as Russian Federation signaled it may resist production caps at a crucial OPEC gathering next week.
If OPEC decides to increase production, prices can fall.
While gasoline supplies in the U.S. unexpectedly fell last week, which led to slight gains in oil prices, they were not enough to overcome the pessimism of the news of an oil supply increase in the country. Production remained at a record 11.7 million barrels per day (bpd).
Saudi Arabia led suppliers to cut production two years ago to curb a glut, then reversed course in June on concerns that United States sanctions on Iran could create a shortage.
This kept more Iranian crude in the market instead of driving exports from Riyadh's arch-rival down to zero and bringing down the price per barrel to $51.18.
The recent spurt in prices was orchestrated by Saudi Arabia, which took the Russian support to stage an output reduction eelier this year. According to the EIA, U.S. commercial crude oil inventories rose by 3.6 million barrels last week compared to the previous week.
Average cost of oil and gas production per barrel changes from country to country according to differences on capital spending, production cost, administrative and transportation cost and gross taxes. By contrast, Saudi Arabia needs oil at more than $80/bbl to balance its budget.