By Henning Gloystein and Florence Tan
SINGAPORE (Reuters) - Oil prices dipped on Tuesday as Saudi Arabia reported strong crude production figures and U.S. investment bank Goldman Sachs warned of further oil price declines.
Tuesday's falls continued price declines on Monday and the previous week, and they came after Brent climbed 40 percent from its January lows, with many analysts saying upward momentum looks to have come to an end as production around the world continues to outpace demand.
Top oil exporter Saudi Arabia pumped 10.308 million barrels of oil per day in April, slightly less than in March but still close to record highs.
Goldman Sachs (N:GS) said in a note that the recent price rally itself prevented a reduction of oversupply and would therefore lead to lower prices going forward.
"While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals," the investment bank said.
"As a result, we believe that the recent price rally is premature (and) that prices need to sequentially weaken, to resume the oil market rebalancing as well as help correct the still intact imbalance of too much capital looking for opportunities in the energy space," it added.
June Brent crude
The price drop was also a response to ongoing debt trouble in the euro zone and a resulting strengthening of the dollar.
Greece paid about 750 million euros (537 million pounds) to the International Monetary Fund late on Monday, but it was not enough to stop worries over future payments.
"Just hours before the loan was due, Greece brought relief to the markets by ordering payment. But don't be too happy just yet," brokerage Phillip Futures warned.
"The four-month extension of Greece's bailout plan...expires next month. This means for the rest of May, Greece will be locked into debating another extension of its bailout plan."
Analysts said prices could fall further on Tuesday if the Organization of the Petroleum Exporting Countries' (OPEC) monthly report due to be released later on Tuesday showed a rise in production.
The American Petroleum Institute will release its data on
Tuesday at 4:30 p.m. EDT (2030 GMT), while the Energy
Information Administration (EIA) will publish its data on Wednesday at 10:30 a.m. EDT (1430 GMT).
Investors will also look to the International Energy
Agency's (IEA) monthly report on Wednesday to assess if oil demand has improved amid lower prices.
