On Wednesday crude oil dropped steeply, as investors cashed up to stay in gains from a recent rally ahead of the release of weekly supply data from the U.S.
In recent months, oil has fallen steeply as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.
In the meantime, market sentiment remained supported amid hopes that a compromise between Greece and its European partners would eventually be reached. According to sources, Greek authorities will ask for a six-month extension of its loan agreement with its international lenders later in the day, easing concerns over the country's future in the euro zone.
On the New York Mercantile Exchange, crude oil for delivery in April fell by as much as $1.62, or 2.98%, to hit a daily low of $52.67 a barrel, before trading at $53.36 during U.S. morning hours, down 93 cents, or 1.68%.
Yesterday, New York-traded oil futures hit $54.92, the strongest level since February 3, before settling at $54.29, up 62 cents, or 1.16%. They have been up almost 16% over the past three weeks amid indications U.S. producers are pulling back on new production in response to low prices.
At the same time, prices are still down approximately 50% from a recent peak of $107.50 hit in June.
Investors anticipated fresh weekly information on U.S.
stockpiles of crude and refined products to gauge the strength of demand
in the world’s largest oil consumer.
The American Petroleum Institute is due to issue its inventories report later in the day, while Thursday’s government report indicated crude stockpiles rise by 3.1 million barrels in the week ended February 13.
The report comes out one day later than usual due to Monday's Presidents Day holiday in the U.S.
On the ICE Futures Exchange in London, Brent oil for April delivery dropped $1.00, or 1.61%, to trade at $61.53 a barrel.
On Tuesday the April Brent contract hit $63.00 a barrel, the most since December 18, before ending at $62.53, up $1.13, or 1.84%.
Brent prices traded in London have surged nearly 22% over the past three weeks, as some investors bet that a bottom had been reached after a seven-month long rout. However, Brent prices are still down approximately 45% since June, when futures climbed near $116.
