Investing.com - West Texas Intermediate oil futures declined for the first time in three days on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose last week.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 10:30AM ET Wednesday. The data was expected to show that crude inventories fell by 1.4 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, surprised market participants and said that U.S. oil inventories rose by 2.3 million barrels in the week ended December 11, compared to expectations for a decline of 2.5 million barrels.
Crude oil for delivery in January on the New York Mercantile Exchange shed 38 cents, or 1.02%, to trade at $36.98 a barrel during European morning hours.
A day earlier, Nymex futures rallied $1.04, or 2.85%, after Congress lifted a 40-year-old ban on most U.S. crude exports as part of a broader spending bill. Prices fell to a six-and-a-half-year low of $34.53 on Monday.
U.S. oil futures are down 30% so far this year amid worries over ample domestic supplies.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for February delivery dropped 96 cents, or 2.49%, to trade at $37.77 a barrel as worries that a global supply glut may stick around for longer than anticipated continued to weigh.
On Tuesday, London-traded Brent tacked on 57 cents, or 1.49%. Futures sank to $36.75 on Monday, a level not seen since the depths of the 2008 global financial crisis.
Brent oil prices are on track to post an annual decline of 32% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at 79 cents a barrel, compared to $1.38 by close of trade on Tuesday.
The price gap between the two benchmarks has narrowed to the smallest level in years, signaling that the U.S. oil market is likely to grow tighter following Congress' decision to lift the ban on domestic oil exports, while a global glut gets worse.
Market participants awaited the Federal Reserve's highly-anticipated policy decision due at 2:00PM ET on Wednesday. Most investors expect the Fed to raise interest rates for the first time since June 2006.