Oil dipped below $114 on Wednesday ahead of official US weekly data that is expected to show an increase in crude stocks, putting the brakes on six days of gains that led to a 4-week high on hopes of further US stimulus measures.
By 12:35 SA time, Brent crude was down 27 cents to $113.75 a barrel, after settling at a four-week high on Tuesday. US crude was leading the fall across crude and key oil product futures, falling $1.02, or 1.14 percent, to $87.88.
Tuesday's slump in US consumer confidence to its lowest in two years, along with Federal Reserve minutes showing policymakers discussed a range of unusual tools they could use to help the economy, further bolstered expectations that the US central bank is ready to act.
The Fed is scheduled to meet on Sept. 20 to discuss options.
“Yesterday's gain was pure speculation about potential quantitative easing and it was not driven by fundamentals. So some profit taking is coming in,” Olivier Jakob with oil consultancy Petromatrix said.
“Today the focus is the data from the (US) Department of Energy and jobs data, which will affect oil demand.”
Analysts in a Reuters poll forecast a moderate 400,000 barrel rise in US crude inventories and a 1.4 million barrel fall in gasoline stocks in the Energy Information Administration figures, due to be released at 1030 EDT (16:30 SA time).
A separate industry report showed late on Tuesday a sharp 5.1 million barrel rise in US crude inventories last week as imports rose and refinery utilisation dropped, while gasoline saw a big drop.
Investors are eyeing a string of labour market data due this week, including US ADP jobs data for August at 16:15 SA time. They include unemployment and non-farm payrolls numbers on Sept. 2.
Although Brent has risen about 7 percent since Aug. 19, it is poised for its steepest monthly loss since June, while US crude is headed for its biggest fall since May due to fears of another recession in the United States and a debt crisis in the euro zone.
Investors were also watching the development of Tropical Storm Katia in the Atlantic, which picked up speed and could become a hurricane by Wednesday, the US National Hurricane Center said.
A tropical wave over the northwestern Caribbean Sea has a 10 percent chance of becoming a cyclone in the next 48 hours, and could move into the western Gulf of Mexico, home to a large concentration of oil and natural gas facilities. - Reuters