U.S. oil fell more than 1 percent on Monday, erasing early gains after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output if other big exporters joined them.
U.S. crude futures settled 40 cents lower, or 1.36 percent, at $29.04 a barrel, after hitting a high of $31.53.
Benchmark Brent prices jumped briefly through $35 a barrel after Russia and Saudi Arabia agreed to keep output at January levels, in what could be the first joint OPEC and non-OPEC deal in 15 years.
Qatari energy minister Mohammad bin Saleh al-Sada said the step would help to stabilize the oil market, which has experienced price declines not seen since the early 2000s because of a supply glut.
But buying quickly ran out of steam as investors weighed the chances of the agreement being sealed, with Iran absent from the talks and determined to raise production.
"A production freeze dependent upon the involvement of Iran seems a bridge too far at this juncture," said Matt Smith, director of commodity research at New York-based ClipperData, an energy data provider.