Oil prices slipped under $66 today after a sharp rally the previous session on expectations of a build in US domestic crude stocks.
US light crude fell 29 cents at $65.78 a barrel by 1:45 p.m. Irish time, after surging $1.91 yesterday to the highest level since early February. London Brent crude futures nudged 15 cents lower at $64.82 a barrel.
Prices have stayed above $60 for more than a month on concerns geopolitical risks in Nigeria, Iran and Iraq would keep supplies tight ahead of the peak summer gasoline demand season in the northern hemisphere.
"The rally was overdone yesterday, and people are now waiting for U.S. inventory stats," said Hiroyuki Kitakata, director of commodities business at Barclays Capital in Japan.
"The main drivers were geopolitical issues and I think sentiment is still more bullish than bearish."
Analysts expect already comfortable crude stockpiles in the United States to have risen a further 800,000 barrels last week in government data due later today, but predict distillate fuels and gasoline will both fall by over a million barrels.
Heavy US refinery maintenance has reduced output while traders worry about a switch to use more ethanol in the motor fuel.
"The market has rallied into the gasoline season -- there's the potential for shortages," said John Brady of ABN AMRO in New York. "We may also see a decent flow of index money at the start of the second quarter and some people may be frontrunning that."
The threat of sanctions against Iran over its nuclear programme lingered in the background, though Western powers softened a draft United Nations Security Council statement on reining in Iran's uranium enriching efforts.
Foreign ministers from the five veto-holding permanent members of the council meet in Berlin on Thursday in an effort to end a deadlock over how to proceed.
(Additional reporting by Neil Chatterjee in Singapore)