U.S. crude futures fell on Tuesday ahead of data expected to show that inventories in the world's top oil consuming nation are close to exceeding record-highs.
Brent also fell but was cushioned by continued geopolitical concerns of an escalation of the standoff in Eastern Ukraine. Sanctions against Russia could stymie supplies from one of the world's biggest producers.
The sell-off increased the discount of the U.S. benchmark to its international counterpart by more than $6. was down nearly $1, clawing back above $109 a barrel after reaching a six-week high of $110.36 last week. U.S. crude plunged by $2.24 to settle at $102.13 a barrel, its largest one day drop since January 2.
Analysts said in the absence of a major escalation in Eastern Ukraine, where separatists still hold government buildings in defiance of a peace accord struck last week, attention instead has turned to U.S. crude oil inventories.
Stocks in the country are approaching all-time highs - after building 10 million barrels in the week ending April 11 they reached 394 million barrels, close to the record 398 million barrels hit last year.
The Energy Information Administration will issue inventory data on Wednesday while American Petroleum Institute data is due later on Tuesday. Analysts polled by Reuters think 2.7 million barrels were added to stocks last week.
Oil investors are also watching the progress of talks between Iran and world powers to end Tehran's disputed nuclear program. President Hassan Rouhani's government confirmed speculation on Monday it had reshuffled the leadership of Iran's atomic agency to sideline nuclear experts opposed to talks with the West on its atomic aspirations.
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