The price of oil fell to near $95 a barrel as a report suggested rising crude supplies in the United States.
By early afternoon in Europe, benchmark crude for March delivery was down $1.34 to $95.30 a barrel in electronic trading on the New York Mercantile Exchange.
The contract rose 47 cents to finish at $96.64 a barrel on Tuesday after a big fall the day before.
Data released yesterday by the American Petroleum Institute showed that US stockpiles of crude oil rose by 3.6 million barrels last week, slightly more than the increase of 3 million barrels forecast by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.
The Energy Department's Energy Information Administration will release its own report - the market benchmark – later today.
"At present, US crude stocks are at a 31-year high for this time of year," said analysts at Commerzbank in Frankfurt. "The price of WTI is suffering accordingly." The benchmark US crude is West Texas Intermediate, or WTI.
Still, reviewing the recent trends, Commerzbank said prices would likely continue to rise.
"Any drop in prices is evidently being seen by market players as a chance to buy at present, suggesting further gains," Commerzbank said.
A stronger dollar also weighed on oil prices by making crude more expensive for traders using other currencies.The euro was down to $1.3521 from $1.3582 late yesterday in New York.
In London, Brent crude was down 70 cents to $115.82 a barrel on the ICE Futures exchange.