Oil’s losing its grip on the highest price in more than three years before a raft of inventory and production data from the US government to the Organisation of Petroleum Exporting Countries (Opec).
Figures from the Energy Information Administration on Thursday are forecast to show weekly US stockpiles fell for a ninth week, while Opec’s monthly report the same day will provide a snapshot on compliance to the supply pact with Russia.
The International Energy Agency (EIA) follows on Friday with its own take on the state of the market. Futures decreased 0.2% New York after slipping 0.9% on Tuesday as technical indicators showed prices are overbought.
While oil closed lower Tuesday for the first time in more than a week, prices have extended a two-year gain as Opec and its allies including Russia trim output to drain a global glut.
Banks from Citigroup to Societe Generale have started to speculate the supply deal may end early, but Russian Energy Minister Alexander Novak said in Moscow that cuts should continue and there is no need to make hasty decisions after recent price gains.
"The downward move was a potential warning sign," said Ric Spooner, a Sydney-based analyst at CMC Markets. "If prices start to fall away from here and drop below the lows of the last day or two, that would give the evidence that we need from a chart point of view to suggest the pause is turning into a correction. However, it would be hard to justify too much of a correction if we continue to see a drop in US inventories and production climbs only slightly."
West Texas Intermediate for February delivery was at $63.62 a barrel on the New York Mercantile Exchange, down 11 cents, at 12pm in Hong Kong. Total volume traded was about 26% below the 100-day average.
There was no settlement Monday because of the Martin Luther King Jr. holiday in the US, and all transactions were booked Tuesday.
Brent for March settlement fell 14 cents to $69.01 a barrel on the London-based ICE Futures Europe exchange after losing 1.6% on Tuesday. The global benchmark crude traded at a premium of $5.45 to March WTI.
Demand growth, falling inventories and strict Opec compliance to supply curbs have helped to underpin the recent price rise, according to Goldman Sachs Group, which predicts futures may exceed its forecasts.
The bank sees "increasing upside risks" to its $62 a barrel forecast for Brent and $57.50 a barrel for WTI in the coming months, it said in a January 16 report.
US crude stockpiles probably dropped by 2.9 million barrels last week, according to a Bloomberg survey before the EIA report.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER