Oil prices nosedived today as market fears that the two-month long surge in the commodity is losing sustainability. Moreover, fresh projections by the analysts that the U.S. crude reserves are set to hit record highs has further perplexed the market sentiment.

Rally fizzling out

The impact of these projections is clearly visible in the oil markets. The Brent Crude, and global benchmark, fell 1.76% to below $40 per barrel while the West Texas Intermediate slipped by as much as 1.50% to $38.80.

Crude prices registered a gain of roughly 45% since February as the oil traders have high expectations from OPEC and non-OPEC members meeting next month in Doha. Analysts are divided over the possible outcome of the meeting with some betting high on output freeze while others are holding on to their scepticism.

Action needed

Saxo Bank senior manager, Ole Hansen, said that the verbal reassurances by the oil producing countries alongside a decline in the oil production in the U.S. has helped the oil prices to rally this far, but now the future depends on some action. The comment underscores the general outlook in the market, which wants to see some tangible action from the producers’ end.

Though OPEC and other non-members are set to meet on April 17, the global oversupplies hint at the losing market control of the OPEC’s market share. In addition to this, the absence of any signs of a major demand push might force the commodity to trade rangebound, according to several analysts.

The oil prices tanked steeply after a preliminary Reuters report showed the U.S. commercial crude oil stockpiles could hit record highs for the seventh month in a row whereas refined product stocks could see some softening.

Meanwhile, Barclays underlined that the commodities net flows stood at $20 billion in between January and February, which means that any reversal in this trend could imply 20% to 25% discounting in oil prices. In such a case oil could hit sub-$30 per barrel zone again, Barclays Warned.