Oil prices have shifted into retreat after reports that the market was reaching equilibrium turned out to be premature.

The price of global benchmark Brent crude traded 2.7 per cent lower last week to close at $45.69 a barrel, after US government data on June 20 showed an increase in petroleum product inventories. It was Brent’s lowest price since May 10 and a sign that the market had over estimated that the global oil glut was easing.

“The oil market has started to reassess the fundamental position,” Edward Bell, commodities analyst at Dubai’s biggest lender Emirates NBD, told Gulf News on Sunday.

US crude inventories are at a seasonal high even after declining for ninth straight weeks through June 15 to 519.5 million barrels, according to the US Energy Information Administration. Meanwhile, US inventories of total crude and petroleum products rose for at least the sixth consecutive week to 1.38 billion barrels.

The market had been in recovery this year. Brent traded at a 2016 high of $52.51 a barrel on June 8 after a 12-year-low of $27.10 a barrel on January 20. That recovery was influenced by production outages in Canada and Nigeria that have since been fixed.

“The kind of rally we saw maybe isn’t warranted considering the amount of product that is out there,” Bell said.

The crude price, which compares to nearly $115 a barrel a little more than two years ago, will also be dampened by concerns over the global economy. The United Kingdom’s vote to leave the European Union (EU) spurred a market sell-off for oil to only to recover days later. But the International Energy Agency (IEA) said on July 13 that “growing uncertainty over the global economy and a stronger dollar” was weighing on the oil price.

A strong US currency has also made dollar denominated currencies more expensive for euro and other currency holders.

“Our underlying message that the market is heading to balance remains on track, but the modest fall back in oil prices in recent days to closer to $45 [a barrel] is a reminder that the road ahead is far from smooth,” the IEA said.