Crude oil futures fell 0.42 per cent to Rs 4,015 per barrel today as speculators reduced positions to book profits at prevailing levels, ignoring a firm trend overseas.
According to traders, the higher prices of American oil are due to the reduced capacity of the Canadian oil pipeline Keystone at the end of previous year due to a leak.
Brent for April settlement was at US$65.57 a barrel on the London-based ICE Futures Europe exchange, down 10 cents.
The Brent variety was moving in the red zone because of the rise in the USA dollar, which also affects demand, making commodities denominated in dollars more expensive for countries using other currencies.
More fundamentally, oil markets got a push from comments by Saudi Arabia, the de-facto leader of the Opec, voicing support for production cuts backed by Opec and other producers including Russian Federation since 2017 in an effort to tighten the market and prop up prices.
OPEC Secretary-General Mohammad Barkindo stated that oil demand worldwide for 2018 is expected to expand by 1.6 million barrels per day (bpd) on an encouraging environment.
"WTI oil prices are gaining on Brent as strong US demand and Canadian pipeline issues tighten USA oil supply even further", Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in market commentary emailed to UPI.
The US dollar dropped back on Wednesday and is now down 12pc over the past year against the country's major trading partners.
United States crude stockpiles have continued to build in recent weeks, but exports have grown - leaving something of a hole at the chief U.S. oil hub at Cushing, Oklahoma. Europe's main indexes were fairly stable on Tuesday but Asian markets closed broadly lower, with the Nikkei 225 closing down 1 percent, South Korea's Kospi falling 1.13 percent and the Shanghai Composite slumping 0.46 percent. The American crude is strengthening versus the Middle East marker as a combination of new pipeline options, a rail vehicle crunch, demand from Gulf Coast refineries and a thirst for USA supply from overseas means less is being hoarded.