Oil prices fell Tuesday but remained poised to resume their upward trend with forecasts that U.S. inventory data due this week will show a decline in gasoline and distillate stockpiles.
Also putting a relatively high floor under prices were worries over tensions between Western powers and Iran, OPEC's No. 2 supplier, and snowy weather in the U.S. Northeast, the country's largest heating oil market.
"Cooler temperatures ... returned to the U.S. Northeast," said Vienna's PVM Oil Associates, linking that development to "forecasts for drawdowns in U.S. gasoline and distillate stocks" in making a case for relatively bullish market.
Light, sweet crude for April delivery dropped 87 cents to US$60.52 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The contract rose by 0.4 percent to close at a 2-month high of US$61.39 a barrel Tuesday.
Brent crude for April was down 91 cents at US$60.42 a barrel on the ICE Futures exchange.
Analysts are expecting a U.S. government report due Wednesday to say both distillate and gasoline stockpiles fell in the week ended Feb. 23.
Distillate stockpiles, which include heating oil and diesel fuel, are likely to fall by 2.6 million barrels in the report by the U.S. Energy Department, according to a Dow Jones Newswires survey of analysts.
Gasoline stockpiles are seen declining by 1.6 million barrels while crude oil inventories are expected to rise by 1.2 million barrels.
On Monday, the United States, the four other permanent members of the United Nations Security Council and Germany began work on a new U.N. resolution that could impose further sanctions on Iran over its nuclear program after Tehran rejected U.N. demands it stop enriching uranium, reports AP.
Heating oil demand was expected to rise with a winter storm that pounded the U.S. Midwest on Monday with as much as two feet (60 centimeters) of snow. The storm also dumped more than a foot (30 cm) of snow on the Northeast.
Heating oil futures dropped nearly 2 cents to US$1.7379 a gallon (3.8 liters) on the Nymex while natural gas slipped by more than 13 cents to US$7.570 per 1,000 cubic feet.