- Brent and U.S. crude hit their highest levels since mid-2015 on Tuesday.
- The jumps were fueled by pipeline outages in Libya and the North Sea.
- The UK North Sea Forties pipeline is gradually resuming operations.
Oil prices fell on Wednesday after hitting a near two-and-a-half year high in the previous session as analysts said the rally was gradually running out of steam despite supply outages in Libya and the North Sea.
U.S. West Texas Intermediate (WTI) crude futures ended Wednesday's session down 33 cents at $59.64 a barrel. WTI broke through $60 a barrel for the first time since June 2015 in the previous session.
Brent crude futures were down 54 cents at $66.48 a barrel by 1:52 p.m. ET (1752 GMT) after breaking through $67 for the first time since May 2015 the previous day.
"The market continues to gravitate towards bullish news but today we are seeing a little bit of profit-taking," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
On Tuesday, Libya lost around 90,000 barrels per day (bpd) of crude oil supplies from a blast on a pipeline feeding Es Sider port.
Repair of the pipeline could take about one week but will not have a major impact on exports, the head of Libyan state oil firm NOC told Reuters on Wednesday.
The Libyan outage added to supply disruptions of recent weeks, which also included the closure of Britain's largest Forties pipeline.
On Wednesday, Forties was pumping at half its normal capacity and its operator was pledging to resume full flows in early January.
The Forties and Libyan outages, which together amount to around 500,000 bpd, are relatively small in a global context of both production and demand approaching 100 million bpd.
"While supply impact is immaterial, it shows that with the market structurally undersupplied and inventories continuing to draw, geopolitical risk has now re-emerged as an important factor in day-to-day trading dynamics," analysts at Tudor Pickering Holt Energy Research said in a note.
Oil markets have tightened significantly over the past year thanks to voluntary supply restraint led the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Russia.
Data from the U.S. Energy Information Administration (EIA) shows that following rampant oversupply in 2015, global oil markets gradually came into balance by 2016 and started to show a slight supply deficit this year, resulting in a reduction of global fuel inventories.
EIA data implies a slight supply shortfall of 180,000 bpd for the first quarter of 2018.
OPEC and Russia started withholding production last January, and the current schedule is to continue cutting throughout 2018.
A major factor countering efforts by OPEC and Russia efforts to prop up prices is U.S. oil production, which has soared more than 16 percent since mid-2016 and is fast approaching 10 million bpd.
Only OPEC king-pin Saudi Arabia and Russia produce more. The latest U.S. production figures are due to be published by the EIA on Thursday.
Matt Stanley, a fuel broker with Freight Investor Services in Dubai, said the rising U.S. output meant oil markets were not as tight as many analysts think it is.
"U.S. oil production is...more than capable of plugging any supply deficits," he said.