Oil traded sideways around $66 a barrel on Wednesday, ahead of inventory data expected to show a build in crude but a drop in fuel supplies in the United States.
US light sweet crude oil futures for May delivery shed 13 cents to $66.10 a barrel in early electronic dealing, after sliding by 51 cents in New York. London Brent crude fell 19 cents to $66.20 a barrel.
Prices neared $68 a barrel on Monday, their highest since February, but have since pulled back as the flow of fresh fund money into the energy complex abated and technical indicators pointed to a period of short-term consolidation.
"There was some kind of profit-taking due to the feeling that the market is overbought," said Tetsu Emory, chief strategist at Mitsui Bussan Futures. "I think we need more of a correction to the downside, down to $65.15."
Prices also retraced gains on forecasts that weekly inventory data due later on Wednesday will show a 1.1 million-barrel increase in crude oil stocks, which touched a seven-year high just a month ago.
Still, concerns about the state of fuel inventories ahead of the summer driving season have checked losses.
Gasoline and distillate stocks are both expected to have fallen by 1.6 million barrels last week, a Reuter's poll found. "If we get more bullish figures, especially in gasoline inventories, then the market will likely rebound," said Emory.
Oil prices are up more than 8 percent since the start of the year, buoyed by investor enthusiasm for commodities and supply worries in Opec member's Nigeria, Iran and Iraq. Iran has vowed not to stop exporting crude over its nuclear row with the West, but traders still fear the world's fourth-largest exporter might try to use oil as leverage.
In Nigeria, more than 500,000 barrels per day (bpd) of production has been shut in for almost two months due to militant attacks, although the country's top oil official said that Royal Dutch Shell would reopen its 115,000-bpd offshore EA field this week.
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