Oil prices were volatile on Tuesday, falling to their lowest level since April before recovering with concerns about rising gasoline stocks .

Since hitting $52 a barrel in early June, oil prices on both sides of the Atlantic have dropped by more than 15 per cent.

One factor driving prices lower has been rising product stocks and fears that it could delay the long-awaited rebalancing of the oil market.

“There is a growing concern that a falling surplus in the crude oil market is being replaced by a glut of products,” said Julian Jessop of Capital Economics. “Indeed, stocks of gasoline are higher than usual.”

Brent, the international crude market, fell as much as 67 cents to $44.14 a barrel before recovering and flipping briefly into positive territory. West Texas Intermediate, the US oil benchmark, also recovered after trading down 71 cents to $42.36.

Gasoline stocks usually fall in the summer as demand peaks in the northern hemisphere but this year the decline has been relatively muted.

In fact in the US — the world’s most important gasoline market — inventories have continued to rise, hitting 241m barrels last week.

This in turn is pressuring gasoline prices and raising fears that refiners will decide to buy less crude to turn into fuel.

BP said on Tuesday that its refining margins has slumped to six-year low and would remain under “significant pressure” in the coming months.

At the same time, between January and May have started to ease.

Most of the Canadian production that was forced to close because of wildfires has returned, although there is still a question mark over supplies from Libya following a deal between two rival governments.

US explorers have also increased the number of rigs drilling for oil, which have risen for four consecutive weeks.

This is important because declining US production is one of the key factors that analysts say will drive the rebalancing of the oil market.

“Although declines from existing wells are expected to result in a net decrease in production, increased drilling and higher well productivity are expected to partially offset the decline,” the US Energy Information Administration said on Tuesday.

Against this backdrop, hedge funds and speculators have turned increasingly bearish on oil.

The combined net long position in Brent and WTI — the difference between bets on rising and falling prices — has fallen to 453m barrels of oil, down more than 200 barrels from its peak at the end of April.

“This has been largely driven by a fairly rapid take-up of short positions by the money managers group, which looks reflective of a broader change in sentiment as regards price direction,” said analysts at JBC Energy, a Vienna-based consultancy.

Short positions in WTI have increased to 141m barrels, up from just over 50m at the start of June as concerns about the gasoline surplus have mounted.