From Reuters:

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. Reuters/Lucy Nicholson

Oil gave up most of its early gains on Thursday to trade around $40 per barrel as persistent oversupply concerns offset a surprise fall in U.S. crude inventories after 10 weekly rises.

Brent futures are down more than 6 percent this week and having dipped below $40 per barrel there are renewed expectations it might test 2008’s low around $36.

Brent futures were up 12 cents $40.23 per barrel at 1210 GMT (0710 EDT), having traded as high as $40.70.

West Texas Intermediate (WTI) U.S. crude futures were down 11 cents at $37.05 per barrel, erasing early gains. WTI is down nearly 13 percent this month.

Crude inventories fell 3.6 million barrels in the week to Dec. 4, compared with analysts’ expectations for an increase of 252,000 barrels, U.S. Energy Information Administration (EIA) data showed.

“It’s a glimmer, and for now we’re consolidating above $40 per barrel. But OPEC showed last week it’s a paper tiger in that it won’t do anything to prevent supply growth,” said Michael Hewson, chief market strategist at CMC Markets.

The Organization of the Petroleum Exporting Countries last week failed to reach an agreement on production quotas, leading to fears that increased production from Iran and elsewhere would deepen the glut further.

OPEC forecast on Thursday that oil supply from non-member countries will fall more sharply next year, a development that would suggest its strategy…

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