Oil held below $93 a barrel today, as concerns over Venezuela's move to halt shipments to US major Exxon Mobil were offset by an expected build in crude inventories in the world's largest consumer.
US crude for March had fallen 8 cents to $92.70 a barrel earlier, while London Brent crude had slipped 6 cents to $92.80.
President Hugo Chavez's decision to cut oil exports to Exxon Mobil yesterday came after the largest company in the United States won a court decision freezing $12 billion of Venezuela's overseas assets in a fight for compensation after Mr Chavez seized a heavy oil project last year.
"I think these prices reflect some short-covering in the market, but I don't see these conditions as something that will continue long term," said Kaname Gokon, deputy general manager at Okato Shoji Co's research section.
Top global oil producers have assured the United States they can make up for a major supply disruption should Venezuela cut exports, a US government official said yesterday.
But even if supplies did fall, oil inventories in the United States look healthy.
An expanded Reuters poll ahead of today's US government data showed forecasts for an average 2.7 million barrel build in crude stocks due to strong imports and a low level of refinery utilisation. That would mark the fifth consecutive weekly rise in crude inventories on concerns that the slowing US economy would dampen oil demand.
Analysts also forecast a 1.8 million barrel increase in gasoline stocks, while distillates are expected to drop 1.4 million barrels.
In addition, the head of the International Energy Agency (IEA) said yesterday that Opec should maintain current crude output levels to build up global oil stockpiles in the second quarter, and expressed concern about Venezuela's move against Exxon.
But Venezuelan oil minister Rafael Ramirez said on Tuesday fellow that Opec members had expressed solidarity with the South American nation in its legal fight with Exxon Mobil.
The IEA will also release its monthly Oil Market Report today.