Investing.com - Oil prices gave back some of the prior session’s strong gains in Europe trade on Tuesday, as investors shifted their focus back to concerns over a global supply glut and slowing global demand.
Crude oil for April delivery on the New York Mercantile Exchange shed 66 cents, or 1.98%, to trade at $32.73 a barrel by 08:00GMT, or 3:00AM ET.
A day earlier, New York-traded oil futures jumped $1.64, or 5.17%, after the International Energy Agency said it expected U.S. shale production to fall this year and next.
Prices found further support amid indications U.S. oil drillers are cutting back on production. According to industry research group Baker Hughes, the number of rigs drilling for oil in the U.S. decreased by 26 last week to 413, the ninth straight weekly decline.
A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future. However, U.S. oil production totaled 9.1 million barrels last week, close to the highest level since the early 1970s.
U.S. crude stockpiles increased by 2.1 million barrels last week to an all-time high of 504.1 million barrels, underlining concerns over a domestic supply glut.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 36,000 barrels last week, raising fears that the nation's largest storage facility is nearing full capacity.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery declined 60 cents, or 1.73%, to trade at $34.09 a barrel. On Monday, London-traded Brent futures rallied $1.68, or 5.09, as investors continued to hope for a production freeze from the Organization of Petroleum Exporting Countries.
OPEC Secretary-General Abdullah El-Badri said earlier that oil producers could "take other steps" to tackle the oil glut if a proposed supply freeze is successful.
Top oil producers Russia and Saudi Arabia agreed to freeze oil production at January levels last week, provided other oil exporters joined in. But Iran stopped short of committing to the proposal, casting doubts over whether the freeze will happen.
Oil futures are down nearly 70% since the summer of 2014. Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $1.36 a barrel, compared to a gap of $1.30 by close of trade on Monday.