Oil fell more than $1 toward $61 a barrel on Wednesday, failing to build on gains of over 1 percent in the previous session as analysts said a recent rally was overblown.
“The lack of follow-through higher yesterday is a worry and there’s plenty of reason to be neutral here and observe carefully,” PVM Oil Associates director and technical analyst Robin Bieber said.
Oil prices have risen more than 35 percent since hitting an almost six-year low of $45.19 in January, in an ascent fueled by industry spending cutbacks and falling U.S. rig counts.
Benchmark Brent crude futures LCOc1 were down $1.40 at $61.13 by 1240 GMT (07:40 a.m. EST), having fallen to a low of $61.05 earlier in the session. U.S. crude CLc1 traded at $52.50 a barrel, down $1.03.
“The contracts will look very fragile and accident-prone if one or two more contracts fail to hold key support,” Bieber said.
Volumes were significantly reduced in early trading as several Asian countries started the Lunar New Year holidays, which last for the rest of the week.
BNP Paribas analysts said the recent surge in prices was premature given record-high U.S. crude stocks.