US oil closes 0.58 pct lower, or 25 cents, at $42.77 a barrel

A floorhand works on an oil rig in the Bakken shale formation outside Watford City, North Dakota.
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Oil prices fell as much as 1 percent on Tuesday as worries about a stubborn global petroleum glut offset forecasts for a weekly drop in U.S. crude inventories.

Prices ended the previous day's upward momentum as speculation fizzled that the Organization of the Petroleum Exporting Countries and other oil producers would embark on another round of talks on price cooperation.

U.S. West Texas Intermediate crude settled 25 cents lower, or 0.58 percent, to $42.77.

Brent crude was down 37 cents, or nearly 1 percent, at $45.02 a barrel by 2:00 p.m. EDT.

Oil will head higher regardless of OPEC: Trader

Both benchmarks rallied nearly 3 percent in the previous session, picking up momentum from a rebound late last week after WTI's fall to April lows beneath $40 a barrel.

"The oil market remains in a battle between the trading community which focuses in the shorter term data and information which has been mostly bearish, versus the investment trading crowd which is focused on the medium-to-longer term which is projected to be bullish," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

"Both WTI and Brent will have to move above the $50 per barrel level and remain there for the shorter-term traders to regain confidence that the market is embarking on a new up leg," Chirichella said.

The U.S. Energy Information Administration (EIA) is expected to report on Wednesday a 1.0 million-barrel crude stockpile drawdown for the week ended Aug. 5, after unexpected rises in two prior weeks, analysts polled by Reuters said.

The American Petroleum Institute (API), a trade group, will issue its own report on U.S. petroleum stockpiles after Tuesday's market settlement, at 4:30 p.m. EDT.

The shipping indicator

"To make a significant difference, you need a net draw of 1 or 2 million barrels across the crude, gasoline and distillates balances," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey. "A headline draw of 1 million barrels in crude means nothing to me."

"I think you'll see WTI going back below $40 in the next couple of weeks and fall will likely be a terrible time for oil."

Many analysts and traders have warned of the glut in both crude and refined oil products this summer, particularly pointing to the lagging demand for U.S. gasoline demand despite the peak season for driving in the United States. OPEC's biggest producers have also been pumping near record high levels.

Aside from its scheduled data release on Wednesday, the EIA said on Tuesday that 2016 U.S. crude production declines were expected be around 700,000 barrels per day, smaller than previously expected drop of 820,000 bpd.