Crude oil futures fell 0.42 per cent to Rs 4,015 per barrel today as speculators reduced positions to book profits at prevailing levels, ignoring a firm trend overseas.
Saudi Arabia-the de facto head of OPEC-and Russian Federation indicated last week a willingness to stick an agreement that has helped hold back global production by almost 2%, while boosting crude prices by more than 50% in the second half of 2017.
"Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in US rig count and a slight recovery in the dollar", he said.
Traders said the declines were driven by a recovery in the dollar, which potentially hits fuel demand as it makes greenback-denominated oil imports more expensive for countries using other currencies at home.
However, higher USA production seems to be trying to restrain OPEC's efforts.
In the commodity markets, the gold depreciated for third consecutive session after the United States dollar recovered from its three-year low last week.
The American Petroleum Institute (API) is set to state its forecast regarding the USA crude supply on Wednesday.
That was largely due to soaring USA crude production, which has jumped by over 20pc since mid-2016 to more than 10m bpd, surpassing that of top exporter Saudi Arabia and coming within reach of Russian Federation, the world's biggest producer.
Some analysts also attributed oil's increases to a broad-based rebound in global stock markets.
Elsewhere, there are more indications of inflationary pressures building in the USA economy.
It said that lower forward prices for oil when compared with nearer-term and immediate (spot) delivery prices (a market structure known as backwardation) indicates stronger demand and tighter supply, leading to some investment houses raising their price forecasts.
Gold prices rose further last Thursday, supported by a weaker dollar as investors bought the yellow metal as a hedge against inflation after a faster-than-expected rise in U.S. consumer prices last month. This made WTI futures extend their gains well above $60 per barrel levels and the counter is now up 1.28% at $62.35 per barrel.