SINGAPORE By Henning Gloystein and Florence Tan
A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson
(Reuters) - Brent crude fell more than 1 percent on Tuesday, paring overnight gains of nearly 6 percent, after Goldman Sachs said prices needed to remain low for months to achieve a slowdown in U.S. output growth.
Benchmark prices had surged on Monday as traders pushed back expectations of how quickly Iran might increase exports after a preliminary nuclear deal and judged that a months-long rise in U.S. crude inventories may be slowing.
Brent May crude dropped 63 cents to $57.49 (39 pounds) a barrel by 0453 GMT after hitting $58.24 in the previous session, its highest since March 27.
U.S. May crude was down 44 cents at $51.70 a barrel after ending Monday at $52.14, the highest closing price since Feb. 18.
Goldman said in a research note it expected U.S. crude inventories to top out in April and subsequently draw down at 350,000 barrels per day during May-September, when demand for fuel to power cars and air conditioners is at its greatest.
Still, the bank said it saw little upside for its $40 a barrel forecast over the next three months as inventories would likely rise again by October, pressuring prices into 2016.
"Prices need to remain low in coming months to achieve a sufficient and sustainable slowdown in U.S. production growth," the bank said, adding that the U.S. production outlook for 2016 makes its forecast for $65-a-barrel oil next year look too high.
On Monday, energy information group Genscape said its data showed Cushing stocks rose by only 169,000 barrels in the week to April 3. Traders said the unexpectedly tiny rise was likely a one-off interruption in the unprecedented build in U.S. inventories, not a reversal.
The American Petroleum Institute will release its weekly oil inventories data on Tuesday at 4:30 p.m. EDT (9.30 p.m. BST), while the Energy Information Administration will publish its data on Wednesday at 10:30 a.m. EDT.
U.S. commercial crude stockpiles were seen extending their record build for the 13th consecutive week, while gasoline inventories likely continued to drop, a preliminary Reuters survey showed. [EIA/S]
Yet West Texas Intermediate may get another boost as refineries return from maintenance and take more crude to prepare for peak summer fuel demand, said Ric Spooner, chief analyst at CMC Markets in Sydney.
"A lot of people are waiting to see some improvement in the supply-demand balance and we're getting closer to the time when it might happen," Spooner said.
(Editing by Joseph Radford, Tom Hogue and Alan Raybould)