Oil prices are off three-month highs on Thursday as analysts all but rule out any sustainable rally in oil prices. The broad view is that the current drop in output is mainly due to seasonal maintenance and that the problem of oversupply looms on the market.

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Brent Crude dipped 1.39% to $40.50 during early European trade. The West Texas Intermediate lost 0.99% to $37.91. Virendra Chauhan, an analyst at Energy Aspects, said that prices are likely to weaken from here as refineries enter turnaround season. Demand for crude takes a hit when refineries across the world follow maintenance schedules ahead of summer.

Oil prices witnessed a rebound by more than 5% yesterday as a fall in inventory in the Unites States eclipsed concerns of huge stockpiles. However, analysts reiterated that stockpiles of more than 1 million excess barrels per day will hang around for the long-term.

No Hope of a Deal

Amidst these developments, oil traders are not closely following any potential agreement between OPEC and non-OPEC members, including Russia. The indication that Latin American producers will review the need to freeze the output at record levels has not been taken particularly seriously.

According to Barclays, Saudi Arabia is not likely to cut production and aims to maintain its production to nearly 10.2 million barrels per day over the next five years. Based on the facts, many oil research firms believe that the oil oversupply will remain as it is until 2017 or might even stretch to 2018, leading to lower prices.

Apart from this, the European Central Bank has cut interest rates further today, which has brought down the Euro against the dollar and could end up hurting dollar traded oil imports.

iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) closed the previous day’s session higher by 3.04% to $5.43.