Oil extended declines after the biggest loss in three weeks before weekly US crude inventory data and as the market awaits comment from the Nigerian government on a proposal by militants to end hostilities.

October futures fell as much as 1.7 per cent in New York after declining the first time in eight days on Monday.

Crude stockpiles probably dropped by 1 million barrels last week, before a report from the Energy Information Administration on Wednesday.

The cease-fire declared by Niger Delta Avengers should be viewed with caution, according to analysts from Commerzbank and Global Risk Management.

Oil rose more than 20 per cent on Thursday, less than three weeks after it tumbled into a bear market. Prices were driven higher partly by speculation that informal talks among members of OPEC next month may lead to action to stabilize the market. There is a possibility that producers may agree to freeze output, according to Goldman Sachs.

“We’re seeing a bit of profit taking,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “It’s about how far the price had climbed in relation to the current underlying fundamental situation. There is still plenty of supply around. It wouldn’t be surprising to see this downtrend continue and it’s possible we could see some sort of basing around $44 to $45 a barrel.”

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West Texas Intermediate for October delivery lost as much as 79 cents to $46.62 a barrel on the New York Mercantile Exchange and was at $46.82 a barrel at 1:23 p.m. in Hong Kong.

The September contract expired Monday after dropping $1.47 to close at $47.05, snapping the longest run of gains since 2012. Total volume traded was about 61 per cent above the 100-day average.

Brent for October settlement lost as much as 65 cents, or 1.3 per cent, to $48.51 a barrel the London-based ICE Futures Europe exchange. Prices slipped $1.72, or 3.4 per cent, to settle at $49.16 on Monday. The global benchmark traded at a $1.87 premium to WTI.

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US gasoline stockpiles probably decreased by 1.5 million barrels for a fourth week of declines before the EIA report. Crude and motor fuel inventories are at the highest seasonal level in at least two decades.

Previous comments by the Niger Delta Avengers distancing the group from talks with the Nigerian government cast doubt on the recent cease-fire proposal, according to Michael Poulsen, oil risk manager at Global Risk Management.

A potential deal to freeze production between OPEC and some non-OPEC suppliers is possible after six failed attempts and would show signs of cooperation from Saudi Arabia’s new energy minister, Goldman analysts including Damien Courvalin said in a report.