U.S. crude for March slipped 24 cents to $87.24 a barrel at 0354 GMT (10:54 p.m. ET), while ICE Brent eased 8 cents to $99.17 a barrel.
“There’s pressure for crude oil prices to go down,” said Ken Hasegawa, a commodity derivatives manager at Japan’s Newedge brokerage.
“Fundamentally, I don’t think crude oil supplies are tight. The market needs a correction, and now is the time,” he said, adding that prices were up on the political tension in Egypt.
“WTI should come down to $85 a barrel this month, while the spread between WTI and Brent will likely be around $10.”
Egypt, a small oil and gas exporter, controls the Suez Canal and the Suez-Mediterranean (SUMED) oil pipeline, which together account for nearly 3 percent of daily global oil demand.
While transit through the canal has so far been unaffected by the crisis in the region, concerns remain that the turmoil might spread across the Middle East.
Egypt continues to be plagued as protesters on Tuesday called for a push to eject President Hosni Mubarak from power after the government conceded little ground in talks with the opposition and sought to squeeze demonstrators out of central Cairo.
Global oil prices could exceed $110 a barrel if political unrest in Egypt continues, Imad al-Atiqi, a member of Kuwait’s Supreme Petroleum Council said on Sunday.
Oil prices could also more than double to $200 per barrel if the Suez Canal closes because of the crisis in Egypt, though there is no sign of that happening at the moment, Venezuela’s oil minister Rafael Ramirez said last week.
Technical charts, however, turned bearish, indicating prices may drop from current levels toward $85, according to a Reuters market analyst.
CRUDE STOCKPILE SEEN UP
On the data front, investors were eyeing weekly inventory reports from the United States on Tuesday and Wednesday for trading cues.
The average crude stockpile in the U.S. were forecast up 2.5 million barrels for the week ended February 4 as refiners continued to rebuild supply after drawing on inventories during much of December for year-end tax trimming, a survey showed.
Crude stocks were expected to be beefed up by another increase in oil stored at the Cushing, Oklahoma, delivery hub for crude oil futures traded on the New York Mercantile Exchange.
If so, that would post a new peak at the hub, after stocks there rose 667,000 barrels to a record 38.33 million barrels in the week to January 28, based on data from the U.S. Energy Information Administration (EIA).