Oil prices give up early gains as crude, product glut persists

Oil prices dipped away from early gains on Tuesday as the risk premium following the Paris attacks and the French air strikes in Syria faded, and traders began to focus on the global oversupply in crude and petroleum products again.

Oil rigs and platforms are seen at Maracaibo's lake near the western city of Maracaibo January 2, 2008.

Analysts said that despite the Paris attacks and French retaliation against Islamic State (IS) in Syria, prices would remain low for the rest of the year and into 2016 as oil markets stay oversupplied, with 2015 production outpacing demand by 700,000 to 2.5 million barrels per day, according to estimates.

Front-month U.S. crude futures CLc1 initially rose towards $42 per barrel but then dipped back to $41.62 a barrel by 0745 GMT, down 12 cents from its last settlement.

Internationally traded Brent crude futures LCOc1 rose towards $44.80 before dropping back to $44.59 a barrel.

"The well-supplied crude market, record high inventories in OECD and lack of a material threat to the oil facilities in the Middle East from the military escalation against IS in Syria are going to prevent geopolitical premiums building in oil prices," BMI Research said.

On the supply side, ANZ bank said that U.S. shale oil production, which many analysts said would fall sharply as a result of lower oil prices, would only dip.