U.S. oil prices sank 3.7 percent on Tuesday after Goldman Sachs suggested the recent rally was unsustainable and as analysts expected another U.S. stockpile build.
Comments from Goldman Sachs analysts that poured cold water over the prospects for a sustained rally also piled pressure on prices.
Differing views on a plan to limit oil output also put the market on the defensive. Kuwait, which produces 3 million barrels per day (bpd), said it will freeze output only if all major producers participate, including Iran, which has balked at the plan.
News of a meeting of Latin American crude producers set in Quito for Friday had boosted oil prices on Monday, and the bullish sentiment earlier swept over into Tuesday's session.
"The comments out of Kuwait have encouraged the sell-off and it appears likely that a focus on weekly oil inventories will encourage prices lower," said Matt Smith, director of commodity research at New York-based Clipper Data.