US light crude traded down 43 cents to $55.60 a barrel, slipping further from the record $57.60 struck last week after a 2.5% drop on Tuesday on speculative profit-taking. Brent crude oil fell 24 cents to $54.35 a barrel. But brokers and traders said the market's bullish sentiment was intact, with prices up nearly 28% from the start of the year as booming demand in the US and China threatens to strain global production capacity.
I don't think this little dip we're having is going to last too long, said Bob Frye, a Woodside, California-based commodity broker at Access Futures and Options Trading. I'm looking for a lot higher prices -- $60 to $63 is my major target.
Gasoline stocks were expected to have fallen 1.2 million barrels and distillate stocks, which include heating oil, were seen down 1.3 million barrels.
Dealers will be scrutinising the gasoline data after last week's steep fall in stocks showed demand was running strong despite record-high prices at the pump.
Opec president Sheik Ahmad al-Fahd al-Sabah said on Tuesday producers would not need to decide for up to two weeks whether to increase supply by another 5,00,000 barrels per day (bpd), but could act quickly if needed.