New York's main contract, West Texas Intermediate crude for delivery in May, shed 45 cents to USD 106.88 per barrel while Brent North Sea crude for May settlement was down 61 cents at USD 124.93.
"Oil prices dropped... as investors bet that rising US stockpiles signal fuel demand may falter in the world's biggest crude-consuming nation," said Phillip Futures in a market commentary.
Industry group the American Petroleum Institute yesterday forecast in a report issued late yesterday that US crude inventories rose by 3.6 million barrels last week. Investors' dim view about US demand was echoed in a closely-watched survey released Tuesday, which showed American consumers growing more pessimistic about economic conditions.
The Conference Board said its consumer confidence index dipped to 70.2 in March, in line with analysts' expectations after a surge in February had brought it to 71.6. Meanwhile reports of a possible release of US strategic petroleum reserves also weighed on prices, Phillip Futures said.
Industrialised nations including the United States, Britain and France have been mulling releasing part of their crude reserves to counter rising prices brought on by fears about a supply disruption in the Middle East.