Brent crude fell from a two-week high as the market weighed forecasts for a surge in US production against OPEC's success in accelerating the pace of draining a global glut.
US West Texas Intermediate (WTI) crude futures were at $61.02 a barrel, up 42 cents, or 0.7 per cent from their last settlement, adding to a 2.4pc gain in the previous session. Oil imports are set to continue to grow at a strong pace and increasingly influence global oil flows and oil markets.
OPEC's biggest producer, which has cut output since past year under an agreement between OPEC and other producers to ease a supply glut, pumped 9.980 million bpd of oil in December, according to the data from the Joint Organizations Data Initiative (JODI).
By mid morning in London, Brent was down 0.72% at $65.22 a barrel, while Nymex WTI gained 0.81% to $62.05.
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A weaker greenback potentially supports consumption of dollar-denominated commodities as it makes fuel and raw materials cheaper for countries using other currencies.
Gold shed 0.3 percent to 1,342.07, while gold futures for the April contract fell by 0.8 percent to $1,344.60.
Monday's USA holiday for Presidents Day supported WTI's performance compared with Brent as the US markets caught up with Monday's gains, said Carsten Fritsch, oil analyst at Commerzbank AG (Xetra: CBK100 - news) in Frankfurt, Germany.
However, since the data was compiled, Brent crude has risen almost 5%, and Tuesday's drop looked more technical rather than based on supply and demand fundamentals. The report said the current economic conditions index climbed to 115.1 in February from 110.5 in January, while the index of consumer expectations rose to 90.2 from 86.3. Premiums for local North Sea grades are at multi-month lows.
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This is bringing a return to winter conditions, with freezing rain likely holding off for several more hours. After a brief warm up, temperatures will drop and the melting snow will turn to ice.
Oil market participants and analysts have been closely watching the record level of supply coming out of the United States that is threatening to undo OPEC's production cuts.
Barkindo said compliance previous year stood at 107 percent and that OPEC and non-OPEC producers would hold a technical meeting in June.
"This has left stocks in the hub below the five-year average for this time of year", said Warren Patterson at ING.
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