Oil prices fell 1.6 per cent after US government data showed an increase in fuel stockpiles in the world's biggest energy consumer.
But traders were still betting on $60 a barrel in the near term as lofty prices have had little effect on economic growth and demand remains robust.
US
light sweet crude fell 95 cents to $58.09 a barrel on the New York Mercantile Exchange, recovering from a session low of $57.85. London's Brent crude fell 75 cents to $56.58 on the International Petroleum Exchange.
Traders said profit-taking had kicked in following a steep rally that pushed US crude to a record peak of $59.70 on Tuesday. But they cited persistent concerns that stockpiles of refined products would be unable to match demand.
"The best gauge is demand and demand has held up very nicely," George Kirkland, global head of upstream at Chevron Corp., told Reuters. "As long as the growth is there, the economy can stand the higher price."
The latest US weekly data on Wednesday showed a decline in overall crude stocks of 1.6 million barrels to 327.4 million barrels, while stocks of refined products increased.
Petrol inventories rose by 200,000 barrels and distillate stocks, including heating oil, jet and diesel fuel, rose by 1.3 million barrels.
The data also showed overall product demand was 1.7 per cent higher over the past month, compared with a year ago. Of this, petrol demand rose by 2.5 per cent and distillate demand by 6.9 per cent.
Officials from the Organization of the Petroleum Exporting Countries have repeatedly said prices are high because of a lack of refining capacity.
They have said the cartel, which is pumping at the highest levels for a quarter of a century, has done all it can by supplying the market with enough oil.
In a radio interview on Wednesday, Algerian Oil Minister Chakib Khelil said strong global demand, together with a lack of refining capacity, meant oil prices would not dip below $50 until the end of the year.
"I don't think that oil prices will drop below $50 until the end of the year," Khelil told Algeria's state radio.
- REUTERS
