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VIENNA, Austria - Oil prices slipped Wednesday after a 2.2 percent jump the previous day as traders awaited the release of weekly U.S. petroleum inventory data.
Profit taking appeared to account for much of the decline, which came after revised upward demand forecasts from the world energy watchdog drove prices higher Tuesday.
Light, sweet crude for March delivery on the New York Mercantile Exchange dropped 33 cents to $58.73 a barrel in electronic trading by noontime in Europe.
The Brent crude contract for March delivery retreated 44 cents to $58.34 a barrel on the ICE Futures exchange in London.
"There has been a pretty strong run from $55 to $60 and so there's profit-taking based on the momentum," said Andrew Harrington, an analyst with ANZ Global Natural Resources in Sydney.
Weekly U.S. Department of Energy supply data due later Wednesday are expected to show some declines following a cold snap in the U.S. Northeast, a major consumer of heating oil.
According to a Dow Jones Newswires survey, U.S. stocks of heating oil and other distillate fuels are expected to fall by about 4-5 million barrels below the 136.3 million barrels reported last week.
"If the expected draw in distillates comes in greater than the consensus, we could see another sharp upward spike in prices," said Edward Meir at Man Financial. "However, expect this rally to prove short-lived, as trading range pressures could once again force prices lower."
Vienna's PVM Oil Associates said that , despite the expected decline in distillate inventories , "crude and gasoline supplies are expected to rise."
Tuesday, the March crude contract jumped $1.25 to close at $59.06 a barrel. Crude oil prices rose after the Paris-based IEA, which is the energy watchdog for the Organization for Economic Cooperation and Development grouping of industrialized nations, boosted its forecast for Chinese and global oil demand.
The organization said world oil demand is expected to increase by 1.55 million barrels a day in 2007 , nearly twice the rate of growth seen in 2006.
In other Nymex trading, heating oil futures fell nearly 2 cents to $1.6763 a gallon while natural gas prices advanced just over a penny to $7.380 per 1,000 cubic feet.
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Associated Press writer Derrick Ho in Singapore contributed to this report.
